Within the framework of the research programme "Strengthening Efficiency and Competitiveness in the European Knowledge Economies", the Centre for European Economic Research (ZEW), Mannheim (Germany), and the Johannes Kepler University, Linz (Austria), organized a workshop on "Entry, Pricing, and Consumer Search in Online Markets". The workshop's objective was to discuss recent scientific contributions to questions related to the economics of online markets as well as firms' strategies and consumers' search behaviour in online markets. Fourteen speakers from international universities presented their on-going theoretical and empirical research in the field of online markets.
Among other matters, the topics discussed on the first day of the workshop covered the impact of online search on the used car market, the willingness to contribute to online platforms using a two-tiered free-premium business model or a case study on how application providers of a very prominent social network reacted to a policy change of the platform provider. The keynote speaker of that day was Professor Gautam Gowrisankaran from the University of Arizona. He presented a dynamic model for estimating consumer purchase decisions in markets for long-lived consumption goods with significant technological progress, such as the market for camcorders. As opposed to static models, this model allows to take into account fluctuations in demand over time.
The contributions on the second day were concerned with the question on how the reduced cost of conducting an online search may affect investments in quality, sales concentration or the provision of information on products. Furthermore, several empirical investigations geared at better understanding of the strategic interaction of firms in the airline industry or in the setting of a price comparison site were presented. The rich and high frequency information in such sites allows investigating shop and consumer behaviour very closely and also allows a look at the product-life cycle of relatively short-lived products.
The second keynote speaker of the workshop, Professor Sara Fisher Ellison from MIT, presented her most recent work on shop strategies in price comparison sites, where prices can be updated with very high frequency. Her research results showed clearly what earlier contributions had already suggested: the investigation of online markets offers a wide range of new possibilities to study repeated interactions of economic players.