Abstract and Keywords
This article, which reviews the work on comparison sites, discusses how comparison sites operate and their main economic roles. It also reports a model of a comparison site. The important issue of price discrimination across channels is explored. It is noted that the comparison site becomes a marketplace more attractive for the buyers than the search market. The market clears when transactions between firms and consumers take place. The fact that firms can price discriminate eliminates the surplus consumers obtain by opting out of the price comparison site and this ultimately destroys the profits of the retailers. The analysis of the simple model of a comparison site has exhibited that product differentiation and price discrimination play a critical role. Click-through data can assist the assessment of structural models of demand.
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