The author systematically examines one of the important issues of information — establishing the market price. He introduces the concept of «search» — where a buyer wanting to get a better price, is forced to question sellers. The article deals with various aspects of finding the necessary information.

Economics of Information

One of the earliest and best known Internet reputation systems is run by eBay, which gathers comments from buyers and sellers about each other after each transaction. Examination of a large data set from 1999 reveals several interesting features. First, despite incentives to free ride, feedback was provided more than half the time. Second, well beyond reasonable expectation, it was almost always positive. Third, reputation profiles were predictive of future performance, though eBay's net feedback statistic is far from the best predictor available. Fourth, there was a high correlation between buyer and seller feedback, suggesting that the players reciprocate and retaliate.

Trust among strangers in internet transactions: Empirical analysis of eBay' s reputation system

Jenny Aker and Isaac Mbiti examine the growth of mobile phone technology over the past decade and consider its potential impacts upon quality of life in low-income countries, with a particular focus on sub-Saharan Africa. They first provide an overview of the patterns and determinants of mobile phone coverage in sub-Saharan Africa before describing the characteristics of primary and secondary mobile phone adopters on the continent. They then discuss the channels through which mobile phone technology can impact development outcomes, both as a positive externality of the communication sector and as part of mobile phone-based development projects, and analyze existing evidence. While current research suggests that mobile phone coverage and adoption have had positive impacts on agricultural and labor market efficiency and welfare in certain countries, empirical evidence is still somewhat limited. In addition, mobile phone technology cannot serve as the “silver bullet” for development in sub-Saharan Africa. Careful impact evaluations of mobile phone development projects are required to better understand their impacts upon economic and social outcomes, and mobile phone technology must work in partnership with other public good provision and investment.

Mobile Phones and Economic Development in Africa

Sub-Saharan Africa has some of the lowest levels of infrastructure investment ub-Saharan Africa has some of the lowest levels of infrastructure investment in the world. Merely 29 percent of roads are paved, barely a quarter of the in the world. Merely 29 percent of roads are paved, barely a quarter of the population has access to electricity, and there are fewer than three landlines population has access to electricity, and there are fewer than three landlines available per 100 people (ITU, 2009; World Bank, 2009a). Yet access to and use of available per 100 people (ITU, 2009; World Bank, 2009a). Yet access to and use of mobile telephony in sub-Saharan Africa has increased dramatically over the past mobile telephony in sub-Saharan Africa has increased dramatically over the past decade. There are ten times as many mobile phones as landlines in sub-Saharan decade. There are ten times as many mobile phones as landlines in sub-Saharan Africa (ITU, 2009), and 60 percent of the population has mobile phone coverage. Africa (ITU, 2009), and 60 percent of the population has mobile phone coverage. Mobile phone subscriptions increased by 49 percent annually between 2002 and Mobile phone subscriptions increased by 49 percent annually between 2002 and 2007, as compared with 17 percent per year in Europe (ITU, 2008). 2007, as compared with 17 percent per year in Europe (ITU, 2008). Mobile telephony has brought new possibilities to the continent. Across urban– Mobile telephony has brought new possibilities to the continent. Across urban– rural and rich–poor divides, mobile phones connect individuals to individuals, rural and rich–poor divides, mobile phones connect individuals to individuals, information, markets, and services. In Mali, residents of Timbuktu can call relainformation, markets, and services. In Mali, residents of Timbuktu can call relatives living in the capital city of Bamako—or relatives in France. In Ghana, farmers tives living in the capital city of Bamako—or relatives in France. In Ghana, farmers in Tamale are able to send a text message to learn corn and tomato prices in Accra, in Tamale are able to send a text message to learn corn and tomato prices in Accra, over 400 kilometers away. In Niger, day laborers are able to call acquaintances over 400 kilometers away. In Niger, day laborers are able to call acquaintances in Benin to fi nd out about job opportunities without making the US$40 trip. In in Benin to fi nd out about job opportunities without making the US$40 trip. In Malawi, those affected by HIV and AIDS can receive text messages daily, reminding Malawi, those affected by HIV and AIDS can receive text messages daily, reminding them to take their medicines on schedule. Citizens in countries as diverse as Kenya, them to take their medicines on schedule. Citizens in countries as diverse as Kenya, Nigeria, and Mozambique are able to report violent confrontations via text message Nigeria, and Mozambique are able to report violent confrontations via text message to a centralized server that is viewable, in real time, by the entire world. to a centralized server that is viewable, in real time, by the entire world.

/pdf/mobile-phones-and-economic-development-in-africa-3mx4qwey95.pdf

Statistics: Methods and Applications.

This paper examines four million daily price observations for more than 1,000 consumer electronics products on the price comparison site http://Shopper.com. We find little support for the notion that prices on the Internet are converging to the ‘law of one price.’ In addition, observed levels of price dispersion vary systematically with the number of firms listing prices. The difference between the two lowest prices (the ‘gap’) averages 23 per cent when two firms list prices, and falls to 3.5 per cent in markets where 17 firms list prices. These empirical results are an implication of a general ‘clearinghouse’ model of equilibrium price dispersion.

/pdf/price-dispersion-in-the-small-and-in-the-large-evidence-from-55reysl7au.pdf

Price dispersion in the small and in the large: evidence from an internet price comparison site

We provide a unified treatment of alternative models of information acquisition/transmission that have been advanced to rationalize price dispersion in online and offline markets for homogeneous products. These different frameworks -- which include sequential search, fixed sample search, and clearinghouse models -- reveal that reductions in (or the elimination of) consumer search costs need not reduce (or eliminate) price dispersion. Our treatment highlights a "duality" between search-theoretic and clearinghouse models of dispersion, and shows how auction-theoretic tools may be used to simplify (and even generalize) existing theoretical results. We conclude with an overview of the burgeoning empirical literature. The empirical evidence suggests that price dispersion in both online and offline markets is sizeable, pervasive, and persistent and does not purely stem from subtle differences in firms' products or services.

/pdf/information-search-and-price-dispersion-323zy9t13b.pdf

Information, Search, and Price Dispersion

Chapter 6 Information, Search, and Price Dispersion

Consumers who bought electronics products at the lowest prices on Shopper.com during 2000 and 2001 saved an average of 16% off the average listed price. The value of the information provided by a service such as Shopper.com depends on the size of the market, which is consistent with a variety of theories. When two firms list prices, consumers save 11% by purchasing at the lowest price rather than at the average price. These savings jump to 20% when more than 30 firms list prices. However, the potential savings accrue only to consumers on the “right” side of the digital divide.

/pdf/the-value-of-information-in-an-online-consumer-electronics-f9din97ccz.pdf

The Value of Information in an Online Consumer Electronics Market

http://faculty.haas.berkeley.edu/rjmorgan/Temporal%20Price%20Dispersion%20v2.7.pdf

Patrick Scholten

Papers

Price dispersion in the small and in the large: evidence from an internet price comparison site

Information, Search, and Price Dispersion

Chapter 6 Information, Search, and Price Dispersion

The Value of Information in an Online Consumer Electronics Market

Temporal price dispersion: Evidence from an online consumer electronics market