Academic Projects

Information Gatekeepers on the Internet and the Competitiveness of Homogeneous Product Markets (published in the American Economic Review in June 2001 by Michael R. Baye and John Morgan) examines the equilibrium interaction between a market for price information (controlled by a gatekeeper) and the homogenous product market it serves. We show that the gatekeeper's profits are maximized in an equilibrium where prices are dispersed, access fees are sufficiently low that all consumers subscribe, advertising fees exceed socially optimal levels, and advertised prices are below unadvertised prices.

Price Dispersion in the Lab and on the Internet: Theory and Evidence (published in the RAND Journal of Economics  in Autumn 2004 by Michael R. Baye and John Morgan) shows that the level of price dispersion observed on the Internet is similar to that observed in laboratory experiments. Moreover, the levels of price dispersion observed in the lab and on the Internet are consistent with two theoretical models of bounded rationality.

Information Gatekeepers and Price Discrimination on the Internet" (published in Economics Letters in June 2002 by Michael R. Baye and John Morgan)  shows that price dispersion persists when firms can price discriminate between their better informed (online) and less informed (brick and mortar) customers.

Price Dispersion in the Small and in the Large:  Evidence from an Internet Price Comparison Site" (published in Journal of Industrial Economics in December 2004 by Michael R. Baye, John Morgan, and Patrick Scholten) is an empirical paper documenting that the information age has not resulted in the "law of one price." However, price dispersion is significantly higher in online markets where relatively few firms compete: Price dispersion is greater in the "small" than in the "large."

Persistent Price Dispersion in Online Markets (in The New Economy and Beyond, Edward Elgar Press) by Michael R. Baye, John Morgan, and Patrick Scholten is an empirical paper which documents that the levels of price dispersion observed in online markets is not totally due to firm heterogeneities.

The Value of Information in an Online Consumer Electronics Market" (published in Journal of Public Policy and Marketing in Spring 2003 by Michael R. Baye, John Morgan, and Patrick Scholten) is an empirical paper that documents one component of the so-called "digital divide." In particular, shoppers with online access spend about 16 percent less for products available at price comparison sites than consumers who do not have access to these sites.

A Dashboard for Online Pricing (by Michael R. Baye, J. Rupert J. Gatti, Paul Kattuman,  and John Morgan) uses insights from five case studies to provide e-retailers a "dashboard" for honing their online pricing strategies.

Brand and Price Advertising in Online Markets (by Michael R. Baye and John Morgan) combines theory with e-retail data to examine the role that branding activities by firms play in online price competition.

Clicks, Discontinuities, and Firm Demand Online (by Michael R. Baye, J. Rupert J. Gatti, Paul Kattuman,  and John Morgan) is an empirical paper using consumer "clicks" data from Kelkoo.com, Yahoo's European price comparison site, to estimate demand online guided by the theoretical insights of "Information Gatekeepers" and related work.

This is just a sample of some of the recent academic work by Michael Baye, John Morgan, and Patrick Scholten in the area of pricing strategy.

 For additional papers and publications on such topics as auctions, contests, mergers, and experts, please click the menu tabs for Michael R. Baye, John Morgan, or Patrick Scholten.