Online Pricing: Review and Directions for Research

The Internet influences prices in two ways: it is a channel for obtaining information, and it is a vehicle for transactions. This paper reviews the literature on the impact of online information on prices, and also reviews the literature on how the features of online markets influence online pricing. The major influences on online pricing that are reviewed are costly and limited search, switching costs, reputation, heterogeneity in search costs, heterogeneity in demand for services, and online–offline competition. Based on this review, suggestions for further research are outlined.