Price Dispersion on the Internet: Empirical Comparison of Several Commodities from the Czech Republic
Price Dispersion on the Internet: Empirical Comparison of Several Commodities from the Czech Republic

Summary/Abstract: The first large scale (almost 500 products, 64,300 individual price listings) empirical study of price dispersion based on the data from the Czech Republic’s e‑shops is presented in the paper. First, simple descriptive indicators like average, max, min, median and standard deviation were calculated for each product. Second, several versions of linear regression models were constructed for each of 10 product categories and evaluated against hypotheses.The price dispersion (measured as a price range or by the standard deviation method) was regressed against its mean market price and number of e-shops. At least one regression model is significant for each product category. For the majority of categories R2 is high or very high (the mean market price variable accounts for 86% to 96.7% in the price dispersion) or at least medium (61.5% or 69%). Some other findings and the important role of pricebots for e-shop owners and marketing managers are also discussed.

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