Essays On Strategic Competition In E-Commerce
This dissertation consists of two essays on retail market change in the context of e-Commerce and one essay on keyword auction at the search engines.
In the first essay, we extend Balasubramanian's analytical model (1998) on competition between the traditional retailer and the direct marketer. We examine how possible entry to the online channel by a conventional brick-mortar retailer changes the result of Balasubramanian (1998). We characterize the equilibriums that arise in that context. Interestingly, the addition of online store to brick-mortar store does not always increase profits. The analysis suggests that successfully entering the e-commerce market can be determined, in part, by considering pros and cons of the new competition dual-channel retailers will face. Internet market sequential entry is examined next. Interestingly, web-only retailer always enters the market, no matter their level of service disadvantage.
In the second essay, we expand the notion of consumers to revisit the price competition in e-commerce. Previously, retail consumers are only geographically differentiated. A new type of consumer - virtual consumers emerge in the environment of e-commerce. The proportion of this virtual consumer turns out to have a direct effect on the characteristics of retail pricing equilibrium.
In the third essay, we look at the bidding practice of selling keyword at the search engines. In complete information setting where the assumption of bidder heterogeneity does not hold, we show that the pay-for-placement approach yields suboptimal performance for media owner. The result sheds some light on the management of pay per click.
School:The Ohio State University
School Location:USA - Ohio
Source Type:Master's Thesis
Keywords:e commerce retail price dispersion pay per click
Date of Publication:01/01/2008