Information Gatekeepers on the Internet and the Competitiveness of Homogeneous Product Markets

  title={Information Gatekeepers on the Internet and the Competitiveness of Homogeneous Product Markets},
  author={Michael R. Baye and John Morgan},
  journal={Microeconomic Theory eJournal},
We examine the equilibrium interaction between a market for price information (controlled by a gatekeeper) and the homogenous product market it serves. The gatekeeper charges fees to firms that advertise prices on its Internet site and to consumers who access the list of advertised prices. Gatekeeper profits are maximized in an equilibrium where (a) the product market exhibits price dispersion; (b) access fees are sufficiently low that all consumers subscribe; (c) advertising fees exceed… Expand
Asymmetric Market Shares, Advertising and Pricing: Equilibrium with an Information Gatekeeper
We analyze the impact of market share on advertising and pricing decisions by firms that sell to loyal, non-shopping customers and can advertise to shoppers through an information intermediary orExpand
Why Do Information Gatekeepers Charge Zero Subscription Fees?
By extending Varian’s (1980) Model of Sales, this paper establishes conditions for an information gatekeeper to offer totally free subscriptions to consumers. Expand
Information markets, product markets and vertical merger
In many markets, firms have the option of advertising at price comparison sites to broaden their market reach. Such sites are often controlled by profit-maximizing “information gatekeepers” chargingExpand
Selling Strategic Information in Digital Competitive Markets
This paper investigates the strategies of a data broker in selling information to one or to two competing firms that can price-discriminate consumers. The data broker can strategically choose anyExpand
Selling strategic information in digital competitive markets
This article investigates the strategies of a data broker selling information to one or to two competing firms. The data broker combines segments of the consumer demand that allow firms toExpand
Competing Gatekeepers
We extend the Baye and Morgan (2001) model to study competition between price comparison sites in the information market on the internet. We identify one symmetric sub-game perfect Nash equilibriumExpand
Consumer Search and Information Intermediaries
In this paper we model the market for a homogeneous good and examine the role of information in determining market outcomes. Unlike in Baye and Morgan (2001) where consumers can only learn about theExpand
Strategic Intermediation in a Two-Sided Market
We examine a two-sided market where intermediaries compete to attract advertising from firms and audience from buyers. Firms sell homogeneous products, compete in prices and must advertise them inExpand
Brand and Price Advertising in Online Markets
There is a unique equilibrium in secure strategies, and the set of equilibria converges to this unique equilibrium as the number of potential e-retailers grows arbitrarily large, including the limit equilibrium. Expand
Platform-Merchant Competition for Selling Services
In this paper, we study whether a monopolistic platform prefers to impose price parity when it competes with merchants for selling services. The platform and the direct sales channel areExpand


Oligopolistic Pricing with Sequential Consumer Search
N identical stores compete by choosing prices for a homogeneous good with constant marginal costs. Consumers search sequentially with perfect recall for the lowest price. One class of consumers,Expand
Oligopolistic Pricing and Advertising
Abstract N sellers advertise a homogeneous good to M buyers whose only source of information is this advertising. There is a unique Nash Equilibrium (NE) in which sellers choose a common advertisingExpand
Advertising in Competitive Markets
In this paper, small firms sell a homogeneous good to small consumers under conditions of free entry, but consumers receive price information only through firms' advertising. In equilibrium, everyExpand
Oligopolistic pricing with heterogeneous consumer search
Abstract A finite number of identical stores sell a homogeneous good to consumers with heterogeneous search costs who search sequentially with perfect recall and without replacement. Consumers'Expand
Informative Advertising with Differentiated Products
In this paper we study the role of promotional expenditures by sellers in a model of product differentiation. Advertising conveys full and accurate information about the characteristics of products.Expand
The purpose of this paper is to study the role and implications of price advertising when shopping trips are costly to consumers. To do so, we introduce advertising into an optimal sequential searchExpand
Consumer search and alternative market equilibria
A general model is presented for studying the connection between imperfect information and imperfect competition, comparing the methodology involved in generating monopolistic competition due toExpand
Learning in an Equilibrium Search Model
This paper explores the role of learning in an equilibrium search model with asymmetric information. Firms with identical but privately observed marginal cost sell a homogeneous good toExpand
Internet Shopping Agents: Virtual Co-Location and Competition
Internet Shopping Agents (ISAs) allow consumers to costlessly search many online retailers and buy at the lowest price. One would expect these ISAs to subject sellers to intense price competitionExpand
A Simple Model of Equilibrium Price Dispersion
This paper demonstrates that price dispersion can exist even within the context of a very simple model. Identical buyers with elastic demand curves sample sequentially from a known priceExpand