M Baye

Michael Baye is the Bert Elwert Professor of Business at Indiana University’s Kelley School of Business, a position he has held since 1997. From July 2007 to December 2008, he also served as Director of the Bureau of Economics at the US Federal Trade Commission (FTC). In his role as chief economist of the FTC, he advised the Commission on antitrust, consumer protection, and economic policy matters.

Baye’s research focuses on pricing strategies and their impact on consumer welfare and firm profits in both online and traditional markets. His academic work on mergers, auctions, patents, advertising, online markets, and other areas related to antitrust and consumer protection has been published in leading economics and marketing journals. Additionally, his academic research on pricing strategies in online markets has been featured in the Wall Street Journal, Forbes, and The New York Times.

Baye has won numerous awards for outstanding teaching and research and has published several textbooks. He  has lectured and spoken at conferences and academic institutions throughout North America and Europe, and has held visiting appointments at Cambridge, Oxford, Erasmus University, Tilburg University, and the New Economic School in Moscow.

Baye holds a BS in economics from Texas A&M University and a PhD in economics from Purdue University.

Excerpt from Who’s Who in Economics

According to the 4th edition of Who's Who in Economics, Michael Baye's research primarily focuses on pricing strategies and their impact on consumer welfare and firm profits. His early papers showed how to properly construct indices of prices when different firms charge different prices for the same product and consumers have imperfect price information.

In subsequent research, these results were extended to retail environments where consumers optimally search for lower prices. His related research showed that, by appropriately modifying price indices, cost-of-living measures and real wage indices to account for a progressive income tax, one could quantify the impact of “bracket creep” on consumer welfare.

This research contributed to the policy debate of the 1980s by documenting the “cost” of various proposals to delay or repeal the indexation of the US federal income tax code.

Media Coverage

Slate: Gadgets for Sale … or Not, December 22, 2006

Last week, USA Today reported that online sales in November increased 25 percent over those from 2005. If you've shopped for gadgets online this holiday season, you almost certainly found that the camcorder or DVD player you wanted was selling at a wide range of prices. Why is there so much price variation for the same product?...

US News & World Report: Plus shipping and handling: revenue (non)equivalence in field experiments on eBay, May 9, 2006

Most customers pay attention only to the total price of something they buy. If a baseball bat costs $150 plus $15 shipping and handling–that's a $165 bat. But on the Internet, researchers find in a new study, businesses may have more flexibility to find that pricing sweet spot. Lower sticker prices and higher shipping costs can add up to more sales. Sellers on eBay can boost profits by setting a low opening bid price and charging higher shipping charges, according to a recently published study by economics professors at the UC–Berkeley Haas School of Business and Hong Kong University of Science and Technology...

Wall Street Journal: The Next Generation of Price Comparison Sites, September 14, 2005

The big attraction with shopping-comparison services, of course, is the hunt for a better bargain. Consumers save 18% to 20% on average by using comparison-shopping sites to buy products on the Web, according to research by Michael Baye, an Indiana University professor; John Morgan, a University of California at Berkeley professor; and Patrick Scholten, a Bentley College professor

New York Times, Chicago Tribune: Price-Comparison Sites Do the Legwork, February 3, 2005

Along with two colleagues - Professor John Morgan of the University of California at Berkeley and Patrick Scholten, an assistant professor of economics at Bentley College in Massachusetts - Professor Michael Baye has published up-to-the-minute statistics on retail pricing strategies.