Baye, M. R., Gatti, J. R. J., Kattuman, P. and Morgan, J.

Clicks, discontinuities, and firm demand online

Journal of Economics and Management Strategy

Vol. 18(4) pp. 935-975 (2009)

Abstract: We exploit a unique dataset from a price comparison site to estimate the determinants of clicks received by online retailers. We find that a firm enjoys a 60% jump in its clicks when it offers the lowest price at the site, and failure to account for discontinuities distorts parameter estimates by nearly 100%. This discontinuity is consistent with a variety of models that have been used to rationalize online price dispersion. Finally, we show that one may use estimates of the determinants of a firm's clicks to obtain bounds on its underlying demand parameters, including standard elasticities of demand.

Author links: Rupert Gatti  

Publisher's Link: http://onlinelibrary.wiley.com/doi/10.1111/j.1530-9134.2009.00234.x/abstract