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| Author: | Hann, I-H. Terwiesch, C. |
| Title: | Measuring the frictional costs of online transactions: the case of a name-your-own-price channel |
| Journal: | Management Science
2003 : NOV, VOL. 49:11, p. 1563-1579 |
| Index terms: | Costs Internet Markets Pricing |
| Language: | eng |
| Abstract: | The offers submitted by consumers to a large name-your-own-price (NYOP) online retailer are studied in this paper. A distinctive feature of this retailer is that it allows consumers to repeatedly submit offers on one and the same product. While consumers could identify the threshold price by incrementing their offer in small steps in each consecutive round, such a strategy would require them to go through many additional online transactions. Frictional costs are defined as the disutility that the consumer experiences when conducting an online transaction, such as submitting an offer. Thus, in the study's setting, consumers trade off a direct financial value for frictional costs. Based on a consumer choice model capturing this trade-off, the observed consumer behaviour is used to reconstruct the frictional cost parameters for the consumers in the sample. |
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