Negative price premium effect in onlinemarket—The impact of competition and buyer informativeness on the pricing strategies of sellers with different reputation levels |
Abstract:
Motivated by the contradictory findings in literature regarding whether high-reputation sellers enjoy a price premium over low-reputation sellers, this paper examines the pricing strategies of sellers with different reputation levels. We find that a negative price premium effect (i.e., a high-reputation seller charges a lower price than a low-reputation seller) exists due to: (1) the presence of both informed and uninformed buyers, which makes sellers follow mixed pricing strategies. It is then possible for a high-reputation seller setting a lower price than a low-reputation seller. Moreover, when the proportion of informed buyers exceeds a certain threshold, the expected price of a high-reputation seller is even lower than that o low-reputation seller; the competition among the sellers, which reduces the high-reputatio sellers' prices but increases the low-reputation sellers' prices. Consequently, a high-reputation seller is more likely to charge a lower price than a low-reputation seller when the competition intensifies. Our empirical findings also support our theoretical results on the negative price premium effect |
| Keywords: |
Negative price premium effect Seller reputation Buyer informativeness Competition Pricing strategy |
| Author(s): |
. |
| Source: |
Decision Support Systems 54 (2012) 681–690 |
| Subject: |
بازاریابی |
| Category: |
مقاله مجله |
| Release Date: |
2012 |
| No of Pages: |
10 |
| Price(Tomans): |
0 |
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