How do you feel when you see a list of prices? the interplay among price dispersion, perceived risk and initial trust in Chinese C2C market

• Price dispersion has a direct negative impact on perceived value
• Price dispersion negatively affects perceived value through perceived risk
• The scope of trust is limited to the initial trust in a set of sellers.
• Price dispersion negatively influences initial trust through perceived risk
• The negative effects of price dispersion are stronger for high-touch products

The issues of trust fraud, product genuineness and price dispersion jointly make Chinese C2C buyers difficult to identify trustworthy sellers with a low price. Little is known about the generation of initial trust when buyers search products and receive lists of widely ranged prices. This study proposes a theoretical model to explain how price dispersion interacts with other factors in C2C purchase, such as initial trust, perceived risk, perceived value and purchase intention. Product type is considered as a moderator. 261 students were invited in a survey-based experiment. The results from PLS analysis show that price dispersion negatively affects perceived value, whilst, positively affects perceived risk, which further influences perceived value negatively. Price dispersion also negatively influences initial trust through perceived risk. Moreover, the negative effects of price dispersion are stronger when buyers purchase high-touch products.