Pricing Behavior on the WEB: Evidence from Online Travel Agencies

This paper extends the empirical results on online retailing by studyingprices for nearly homogenous services – holiday packages –matched across conventional and Internet channels. Controllingfor vertical product differentiation, there is no evidence for lowerprices and price dispersion advertised in the online medium ingeneral, as hypothesized by search theory. It therefore remainsan open issue whether Internet trade can be associated with amore competitive market structure than the conventional market.