TY  - JOUR
AU  - Ellison,Glenn
AU  - Ellison,Sara Fisher
TI  - Search, Obfuscation, and Price Elasticities on the Internet
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 10570
PY  - 2004
Y2  - June 2004
UR  - http://www.nber.org/papers/w10570
L1  - http://www.nber.org/papers/w10570.pdf
N1  - Author contact info:
Glenn Ellison
Department of Economics
Massachusetts Institute of Technology
50 Memorial Drive, E52-380A
Cambridge, MA 02142-1347
Tel: 617/253-8702
Fax: 617/253-1330
E-Mail: gellison@mit.edu

Sara Fisher Ellison
MIT, E52-274A
50 Memorial Drive
Cambridge, MA  02142
Tel: 617-253-3821
Fax: 617-253-1330
E-Mail: sellison@mit.edu
AB  - We examine the competition between a group of Internet retailers that operate in an environment where a price search engine plays a dominant role. We show that for some products in this environment, the easy price search makes demand tremendously price-sensitive. Retailers, though, engage in obfuscation---practices that frustrate consumer search or make it less damaging to firms---resulting in much less price sensitivity on other products. We discuss several models of obfuscation and examine its effects on demand and markups empirically. Observed markups are adequate to allow efficient online retailers to survive.
ER  -