Price Rigidity in Internet Retailing Essay Example | Topics and Well Written Essays - 500 words

Price Rigidity in Internet Retailing - Essay Example However, the internet version presents two fundamental ways of understanding price rigidity and the nature of price adjustment .First; it provides a unique technological context for the micro-level study of price-setting behavior and strategies. Second, these technologies are pointed out as major forces in market transformation hence different from initial doings. As a result of the above authors’ concerns, three main research questions arise; The listed research question explicitly address the aim of this article that focuses on reviewing and synthesizing what we know about price rigidity in non-electronic background as well as to discover the extent to which it explains dynamism of price setting as observed in Internet retailing research frame work. Moreover, this paper states research framework as a tool that provides a means to evaluate the observed empirical evidence for price-change behavior in Internet retailing in a manner that emphasizes theory. The authors express their theoretical views and argue that rigid prices occur when prices do not adequately change in response to underlying cost and demand shocks (Anderson, 1994). It identifies Cost of Price Adjustment, Market Structure, Asymmetric, and Information, Demand-Based as the only 4 theories to explain the happenings. These theories are based on underlying assumptions that prices are under the control of and administered by firms, and not subject to the laws of supply and demand and that firm’s pricing practices and consumer behavior are the key determinants. In that regard, they propose a research framework to examine different theories on price rigidity that will be observed in Internet retailing environments at the different levels of analysis covering the firm, the consumer, and the market. The article describes various analyses done. These analyses include; firm-specific level that focuses on Internet retailers strategic pricing capability that enhances organizational