Consumer search in electronic markets: an experimental analysis of travel services

Electronic markets are frequently touted to be highly efficient. The prevailing hypothesis is that very low information search costs will enable buyers to expand their product information search and comparison beyond what is feasible in conventional markets. The aim of this paper is to evaluate the relative efficiency of product search in current travel service markets. We report the results of our analysis based on an experimental setting with 92 subjects. Our conclusions tend to disagree with previous predictions about the efficiency of electronic markets. The electronic markets observed were found to be at best as efficient as their conventional counterparts. Our results suggest that poor availability of product information and a lack of systems integration severely limit the efficiency of consumer search in present electronic markets.

[1]  H. Simon,et al.  Models of Man. , 1957 .

[2]  A. R. Oxenfeldt,et al.  Consumer Knowledge: Its Measurement and Extent , 1950 .

[3]  Stephanie S. Barrett,et al.  Inter-Organization Information Sharing Systems , 1982, MIS Q..

[4]  J. Bakos.  Reducing buyer search costs: implications for electronic marketplaces , 1997 .

[5]  R. A. Chadwick,et al.  Concepts, definitions and measures used in travel and tourism research. , 1987 .

[6]  Calvin P. Duncan,et al.  External Search: The Role of Consumer Beliefs , 1982 .

[7]  H. Simon,et al.  Rationality in Psychology and Economics , 1986 .

[8]  Pirkko Walden,et al.  Self-Booking of High- and Low-Complexity Travel Products: Exploratory Findings , 2001, J. Inf. Technol. Tour..

[9]  B. Ratchford.  Cost-Benefit Models for Explaining Consumer Choice and Information Seeking Behavior , 1982 .

[10]  O. Williamson.  Transaction-Cost Economics: The Governance of Contractual Relations , 1979, The Journal of Law and Economics.

[11]  R. Deshpandé,et al.  Situational Ethnicity and Consumer Behavior , 1989 .

[12]  Jean S. Bowers,et al.  Impacts of Time and Transportation Costs on Food Shopping , 1977 .

[13]  B. Ratchford,et al.  Consumer information search revisited: Theory and empirical analysis , 1997 .

[14]  John G. Lynch,et al.  Wine Online: Search Costs Affect Competition on Price, Quality, and Distribution , 2000 .

[15]  M. F. Luce,et al.  Constructive Consumer Choice Processes , 1998 .

[16]  J. Semeijn,et al.  THE IMPACT OF INFORMATION TECHNOLOGY ON TRAVEL AGENTS , 1998 .

[17]  B. Wernerfelt,et al.  An Evaluation Cost Model of Consideration Sets , 1990 .

[18]  Ramayya Krishnan,et al.  Prices and Price Dispersion on the Web: Evidence from the Online Book Industry , 2001 .

[19]  H. Simon,et al.  A Behavioral Model of Rational Choice , 1955 .

[20]  Erik Brynjolfsson,et al.  Consumer Decision-Making at an Internet Shopbot , 2001 .

[21]  Pamela E. Grimm,et al.  Toward Understanding the Measurement of Market Efficiency , 1996 .

[22]  T. Malone,et al.  The logic of electronic markets. , 1989, Harvard business review.

[23]  James L. McKenney,et al.  Airline Reservations Systems: Lessons from History , 1988, MIS Q..

[24]  Yannis Bakos,et al.  A Strategic Analysis of Electronic Marketplaces , 1991, MIS Q..

[25]  Augustin M. Cournot.  Cournot, Antoine Augustin: Recherches sur les principes mathématiques de la théorie des richesses , 2019, Die 100 wichtigsten Werke der Ökonomie.

[26]  P. Kline.  Models of man , 1986, Nature.

[27]  Karin Weber,et al.  Profiling People Searching for and Purchasing Travel Products on the World Wide Web , 1999 .

[28]  E. Clemons,et al.  The Nature of Competition in Electronic Markets: An Empirical Investigation of Online Travel Agent Offerings , 1999 .

[29]  R. Staelin,et al.  Prepurchase Information Seeking for New Cars and Major Household Appliances , 1972 .

[30]  Joseph P. Bailey,et al.  Intermediation and electronic markets: aggregation and pricing in Internet commerce , 1998 .

[31]  Brian T. Ratchford,et al.  The Value of Information for Selected Appliances , 1980 .

[32]  Yannis Bakos,et al.  Information Links and Electronic Marketplaces: The Role of Interorganizational Information Systems in Vertical Markets , 1991, J. Manag. Inf. Syst..

[33]  A. Rangaswamy,et al.  Consumer Choice Behavior in Online and Traditional Supermarkets: The Effects of Brand Name, Price, , 2000 .

[34]  C. M. Schaninger,et al.  The Influence of Cognitive Personality Traits and Demographics on Consumer Information Acquisition , 1981 .

[35]  JoAnne Yates,et al.  Electronic markets and electronic hierarchies , 1987, CACM.

[36]  Erik Brynjolfsson,et al.  Frictionless Commerce? A Comparison of Internet and Conventional Retailers , 2000 .

[37]  Yannis Bakos,et al.  The emerging role of electronic marketplaces on the Internet , 1998, CACM.

[38]  L. Moutinho.  Consumer Behaviour in Tourism , 1987 .

[39]  Rob Law,et al.  A Study of Airlines’ Online Reservation Services on the Internet , 2000 .

[40]  O. Williamson.  The Economics of Organization: The Transaction Cost Approach , 1981, American Journal of Sociology.

[41]  Bernd H. Schmitt,et al.  Waiting time and decision making: is time like money? , 1995 .

[42]  Ho Geun Lee,et al.  Do electronic marketplaces lower the price of goods? , 1998, CACM.

[43]  J. Mazanec,et al.  Consumer decision making. , 1994 .

[44]  R. McIntosh.  Tourism principles, practices, and philosophies , 1972 .

[45]  John G. Lynch,et al.  Interactive Home Shopping: Consumer, Retailer, and Manufacturer Incentives to Participate in Electronic Marketplaces , 1997 .

[46]  O. Williamson,et al.  Markets and Hierarchies: Analysis and Antitrust Implications. , 1977 .

[47]  Erik Brynjolfsson,et al.  Consumer Decision-Making at an Internet Shopbot , 2001 .

[48]  Manfred Kochen,et al.  On the economics of information , 1972, J. Am. Soc. Inf. Sci..