Incumbency Advantages: Price Dispersion, Price Discrimination and Consumer Search at Online Platforms

A new version of this paper, co-authored with Klaus Gugler, Sven Heim and Mario Liebensteiner, has become available on November 15, 2021. The paper studies how consumer search affects pricing when consumers observe the baseline price of their current provider and decide whether or not to search for an alternative tariff at an online platform. In such an environment, incumbent providers can price discriminate between consumers with lower and higher search costs. Using panel data on German electricity retail markets, we show that local incumbents increase their baseline and decrease their online tariffs, while entrants decrease their tariffs when consumer search intensifies.

For the paper, please click here.

For the online Appendix, please click here.