Equilibrium price and remark on welfare in electronic commerce

Abstract

Although electronic commerce is regarded as a revolution that has transformed the structure of business and the mechanisms of economic systems, research on price competition and strategic behaviors in electronic commerce has been conducted through theoretical approaches, yielding conflicting results. Considering the development of technologies supporting electronic commerce, there have been few analytical analyses. In addition, previous empirical analyses have focused on where products are priced higher (or lower) rather than finding reasons for those differences. This paper analyzes pricing strategies between conventional offline firms and online firms through a theoretical approach, and draws some strategic implications with some remarks related to welfare aspects. Finally, this paper discusses the limitations of this study and highlights some directions for future research. © 2012 Springer-Verlag GmbH.