Department of Economics

180.375: Economics of Electronic Commerce

Spring 2007

Prof. Joseph Harrington
Department of Economics
Office Location: Mergenthaler 433 (410-516-7615), Office Hours: T 1-3
Class Location and Hours: Shaffer 100, T 3:00-5:00
joe.harrington@jhu.edu

Course Objectives


It is hard to avoid hyperboles when it comes to the Internet but it is fair to say that it is a major new channel for selling products and services. Some of the questions we hope to address in this study group include - How does competition among online sellers differ from competition in standard channels? What are the unique features of the leading online sellers? What is the role of technological innovation? What are the relative advantages and disadvantages of "bricks and clicks" (i.e. companies with physical stores and an online presence; e.g., Barnes and Noble) vis a vis pure online plays (e.g., Amazon.com)? What are the dynamics associated with online competition? How are financial markets measuring the performance of online companies?



Download Course Syllabus.



For a collection of interesting e-commerce links, go to Industrial Organization of the Internet.



Course Requirements


Term Paper (40%) Paper topic approval is due March 6 Outline is due March 27 Paper is due April 17	e Business Project (30%) Team project is due April 10 Presentations will occur on April 17 and 24
Class Participation (30%)	Lots of discussion



There are no exams.


Course Links


Harvard Business School Case Studies can be purchased online at Harvard Business School Publishing.


Online Retailing Sites - Autobytel, Insure.com


Prospectuses - bn.com (excerpts), Google


Search Engines - Overture, Google


Shopbots - mySimon, PriceSCAN, Froogle, dealtime, Shopper.com


Sporting Goods - The Sports Authority, Dick's, Fogdog Sports


Scholarly Papers on Electronic Commerce


Arbayskaya, M. and M. Baye, "Sticky Prices Online: Rate Rigidity and Asymmetric Responses to Cost Shocks in Online Mortgage Markets," Emory University, August 2002. PDF Copy


Acquisti, A. and H. Varian, "Conditioning Prices on Purchase History," Univesity of California-Berkeley, October 2004. PDF Copy


Arnold, M. and C. Saliba, "Price Dispersion in Online Markets: The Case of College Textbooks," University of Delaware, October 2002. PDF Copy


Bajari, P. and A. Hortaçsu, "Winner's Curse, Reserve Prices, and Endogenous Entry: Empirical Insights from eBay Auctions," RAND Journal of Economics, 34 (2003), 329-355. PDF Copy


Bajari, P. and A. Hortaçsu, "Cyberspace Auctions and Pricing Issues: A Review of Empirical Findings," in The New Economy Handbook, D. Jones, ed., 2003. PDF Copy


Bakos, Yannis, "Reducing Buyer Search Costs: Implications for Electronic Marketplaces," Management Science, 43 (1997), 1676-1692. PDF Copy. Note: This paper has some serious errors; see Harrington, Joseph, "Comment on 'Reducing Buyer Search Costs: Implications for Electronic Marketplaces'," Management Science, 47 (2001), 1727-1732. PDF Copy


Bajari, P. and A. Hortaçsu, "Economic Insights from Internet Auctions," Journal of Economic Literature, 42 (2004), 457-486. PDF Copy


Baylis,K. and J. Perloff, "Price Dispersion on the Internet: Good Firms and Bad Firms," Review of Industrial Organization, November 2002. PDF Copy


Barber, B. and T. Odean, "Online Investors: Do the Slow Die First?," Review of Financial Studies, 15 (2002), 455-487. PDF Copy


Barber, B. and T. Odean, "The Internet and the Investor," Journal of Economic Perspectives, 15 (2001), 41-54. PDF Copy


Barber, B. and T. Odean, "Boys will be Boys: Gender, Overconfidence, and Common Stock Investment," Quarterly Journal of Economics, 116 (2001), 261-292. PDF Copy


Baye, M., J. Gatti, P. Kattuman, and J. Morgan, "Estimating Firm-Level Demand at a Price Comparison Site: Accounting for Shoppers and the Number of Competitors," Indiana University, December 2004. PDF Copy


Baye, M. and J. Morgan, "Information Gatekeepers on the Internet and the Competitiveness of Homogeneous Product Markets," American Economic Review, 91 (2001), 454-474. PDF Copy


Baye, M. and J. Morgan, "Brand and Price Advertising in Online Markets," Indiana University, October 2004. PDF Copy


Baye, M., J. Morgan, and P. Scholten, "Price Dispersion in the Small and in the Large: Evidence from an Internet Price Comparison Site," Journal of Industrial Economics, 52 (2004), 463-496. PDF Copy


Bolton, G., E. Katok, and A. Ockenfels, "How Effective Are Electronic Reputation Mechanisms? An Experimental Investigation," Management Science, 50 (2004), 1587-1602. PDF Copy


Brown, J. and A. Goolsbee, "Does the Internet Make Markets More Competitive? Evidence from the Life Insurance Industry," Journal of Political Economy, 110 (2002), 481-507. PDF Copy


Brynjolfsson, E., A. Dick, and M. Smith, "Search and Product Differentiation at an Internet Shopbot," MIT, October 2003. PDF Copy


Brynjolfsson, E., Y. Hu, and M. Smith, "Consumer Surplus in the Digital Economy: Estimating the Value of Increased Product Variety at Online Booksellers," Management Science, 49 (2003), 1580-1596. PDF Copy


Brynjolfsson, E. and M. Smith, "Frictionless Commerce? A Comparison of Internet and Conventional Retailers," Management Science, 46 (2000), 563-585. PDF Copy


Brynjolfsson, E. and M. Smith, "The Great Equalizer? Consumer Choice Behavior at Internet Shopbots," MIT Sloan School of Management, July 2000. PDF Copy


Cabral, L. and A. Hortaçsu, "The Dynamics of Seller Reputation: Theory and Evidence from eBay," U. of Chicago, February 2004. PDF Copy


Campbell, C., G. Ray, and W. Muhanna, "Search and Collusion in Electronic Markets," Management Science, 51 (2005), 497-507. PDF Copy


Carlton, D. and J. Chevalier, "Free Riding and Sales Strategies for the Internet," Journal of Industrial Economics, 49 (2001), 441-461. PDF Copy


Chatterjee, P., D. Hoffman, and T. Novak, "Modeling the Clickstream: Implications for Web-Based Advertising Efforts," Marketing Science, 22 (2003), 520-541. PDF Copy


Chen, P.-Y. and L. Hitt, "Switching Cost and Brand Loyalty in Electronic Markets: Evidence from On-line Retail Brokers," Infomation Systems Research, 13 (2002), 255-274. PDF Copy


Chen, Y. and K. Sudhir, "When Shopbots Meet Emails: Implications for Price Competition on the Internet," Quantitative Marketing and Economics, 2 (2004), 233-255. PDF Copy


Chevalier, J. and A. Goolsbee, "Measuring Prices and Price Competition Online: Amazon and Barnes and Noble," Quantitative Marketing and Economics, 1 (2003), 203-222. PDF Copy


Chevalier, J. and D. Mayzlin, "The Effect of Word of Mouth on Sales: Online Book Reviews," Journal of Marketing Research, forthcoming. PDF Copy


Choi, J. J., D. Laibson, and A. Metrick, "Does the Internet Increase Trading? Evidence from Investor Behavior in 401(k) Plans," Journal of Financial Economics, 64 (2002), 397-421. PDF Copy


Clay, K., R. Krishnan, and M. Smith, "The Great Experiment: Pricing on the Internet," The Handbook of Electronic Commerce in Business and Society, forthcoming. PDF Copy


Clay, K., R. Krishnan, and E. Wolff, "Prices and Price Dispersion on the Web: Evidence from the Online Book Industry," Journal of Industrial Economics, 49 (2001), 521-539. PDF Copy


Clay, K., R. Krishnan, E. Wolff, and D. Fernandes, "Retail Strategies on the Web: Price and Non-price Competition in the Online Book Industry," Journal of Industrial Economics, 50 (2002), 351-367. PDF Copy


Clemons, E., I. Hitt, and L. Hitt, "Price Dispersion and Differentiation in Online Travel: An Empirical Investigation," Management Science, April 2002. PDF Copy


Cooper, J. "Prices and Price Dispersion in Online and Offlilne Markets for Contact Lenses," Federal Trade Commission, Working Paper No. 283, April 2006. PDF Copy


DeLong, J. B. and A. M. Froomkin, "Speculative Microeconomics for Tomorrow's Economy," in Internet Publishing and Beyond: The Economics of Digital Information and Intellectual Property, B. Kahin and H. R. Varian, eds., MIT Press, 2000. HTML Version


Dinlersoz, E. and R. Hernandez-Murillo,"The Diffusion of Electronic Business in the United States," Federal Reserve Bank of St. Louis Review, Jan/Feb 2005. PDF Copy


Edelman, B. and M. Ostrovsky, "Strategic Bidder Behavior in Sponsored Search Auctions," Harvard and Stanford, September 2005. PDF Copy


Edelman, B., M. Ostrovsky, and M. Schwartz, "Internet Advertising and the Generalized Second Price Auction: Selling Billions of Dollars Worth of Keywords," Harvard and Stanford, October 2005. PDF Copy


Elfenbein, D. and J. Lerner,"Links and Hyperlinks: An Empirical Analysis of Internet Portal Alliances, 1995-1999," RAND Journal of Economics, 34 (2003), 356-369. PDF Copy


Ellison, G. and S. Ellison,"Search, Obfuscation, and Price Elasticities on the Internet," MIT, June 2004. PDF Copy


Emre, O., A. Hortcasu, and C. Syverson, "E-commerce and the Market Structure of Retail Industries," NET Institute, Working Paper #05-24, October 2005. PDF Copy


Friberg, R., M. Ganslandt, and M. Sandstrom, "Pricing Strategies in E-Commerce: Bricks vs. Clicks," Stockholm School of Economics, June 2001. PDF Copy


Friedman, E. and P. Resnick, "The Social Cost of Cheap Pseudonyms," U. of Michigan, School of Information, August 1999 PDF Copy


Garicano, L. and S. Kaplan, "The Effects of Business-to-Business E-Commerce on Transaction Costs," Journal of Industrial Economics, 49 (2001), 463-485. PDF Copy


Goldfarb, A. "State Dependence at Internet Portals," University of Toronto, August 2002. PDF Copy


Goolsbee, A. "In a World Without Borders: The Impact Of Taxes on Internet Commerce," Quarterly Journal of Economics, 115 (2000), 561-576. PDF Copy


Goolsbee, A. "Competition in the Computer Industry: Online versus Retail," Journal of Industrial Economics, 49 (2001), 487-499. PDF Copy


Hossain, T., "Learning by Bidding," HKUST, September 2004. PDF Copy


Hossain, T. and J. Morgan, "A Test of the Revenue Equivalence Theorem Using Field Experiments on eBay," HKUST, August 2003. PDF Copy


Houser, D. and J. Wooders, "Reputation in Auctions: Theory and Evidence from eBay," University of Arizona, October 2001. PDF Copy


Internet Fraud Complaint Center - 2003 Annual Report. PDF Copy


Iyer, G. and A. Pazgal, "Internet Shopping Agents: Virtual Co-Location and Competition," University of California-Berkeley, May 2001. PDF Copy


Jin, G. and A. Kato, "Consumer Frauds and the Uninformed: Evidence From An Online Field Experiment," University of Maryland, March 2004. PDF Copy


Jin, G. and A. Kato, "Dividing Online and Offline: A Case Study," University of Maryland, April 2004. PDF Copy


Johnson, E. et al, "On the Depth and Dynamics of Online Search Behavior," Management Science, 50 (2004), 299-308. PDF Copy


Katkar, R. and D. Lucking-Reiley, "Public versus Secret Reserve Prices in eBay Auctions: Results of a Pokemon Field Experiment," Vanderbilt University, July 2000. PDF Copy


Khopkar, T., X. Li, and P. Resnick, "Self-Selection, Slipping, Salvaging, Slacking, and Stoning: The Impacts of Negative Feedback at eBay," U. of Michigan, 2005. PDF Copy


Ku, G., A. Galinsky, and K. Murnighan, "Starting Low but Ending High: A Reversal of the Anchoring Effect in Auctions," Journal of Personality and Social Psychology, 90 (2006), 975-986. PDF Copy


Lal, R. and M. Sarvary, "When and How Is the Internet Likely to Decrease Price Competition?," Marketing Science, 18 (1999), 485-503. PDF Copy


Latcovich, S. and H. Smith, "Pricing, Sunk Costs, and Market Structure Online: Evidence from Book Retailing," Oxford Review of Economic Policy, 17 (2001), 217-234. PDF Copy


Lawrence, S. and C. Giles, "Accessibility of Information on the Web," Nature, July 1999. PDF Copy


Lin, Y.-C. and P. Scholten, "Pricing Behaviors of Firms on the Internet - Evidence from Price Comparison Sites Cnet and Nextag," Bentley College, June 2005. PDF Copy


Lucking-Reiley, D., "Auctions on the Internet: What's Being Auctioned, and How?," Journal of Industrial Economics, 48 (2000), 227-252. PDF Copy


Lucking-Reiley, D., and D. F. Spulber, "Business-to-Business Electronic Commerce," Journal of Economic Perspectives, 15 (2001), 55-68. PDF Copy


Manchanda, P., J.-P. Dube, K. Gohn, and P. Chintagunta, "The Effect of Banner Advertising on Internet Purchasing," U. of Chicago GSB, May 2005. PDF Copy


McDonald, C. and V. Slawson, "Reputation in An Internet Auction Market," Economic Inquiry, 40 (2002), 633-650. PDF Copy


Melnik, M. and J. Alm, "Does a Seller's eCommerce Reputation Matter? Evidence from eBay Auctions," Journal of Industrial Economics, 50 (2002), 337-349. PDF Copy


Miller, N., P. Resnick,and R. Zeckhauser, "Eliciting Honest Feedback: The Peer Prediction Method," University of Michigan, January 2005. PDF Copy


Montgomery, A., K. Hosanagar, R. Krishnan, and K. Clay, "Designing a Better Shopbot," Management Science, 50 (2004), 189-206. PDF Copy


Mukhopadhyay, T., U. Rajan, and R. Telang, "Competition Between Internet Search Engines," Carnegie Mellon University, October 2000. PDF Copy


"Overture and Google: Internet Pay-Per-Click (PPC) Advertising Auctions," London Business School Case Study, March 2003. PDF Copy


Pan, X., B. Ratchford, and V. Shankar, "Can Price Dispersion in Online Markets be Explained by Differences in e-Tailer Service Quality?," University of Maryland, June 2002. PDF Copy


Png, I., T. Lee, and C. Yan, "The Competitiveness of On-Line vis a vis Conventional Retailing," University of Singapore, 2001. PDF Copy


"Pricing and Market Making on the Internet," Harvard Business School, Case 9-500-065, April 4, 2000.


Resnick, P. and R. Zeckhauser, "Trust Among Strangers in Internet Transactions: Empirical Analysis of eBay's Reputation System," University of Michigan, pdf copy, February 2001. PDF Copy


Resnick, P., R. Zeckhauser, J. Swanson, and K. Lockwood, "The Value of Reputation on eBay: A Controlled Experiment," U. of Michigan, March 2004. PDF Copy


Roth, A. and A. Ockenfels, "Last Minute Bidding and the Rules for Ending Second-Price Auctions: Theory and Evidence from a Natural Experiment on the Internet," American Economic Review, 92 (2002), 1093-1103. PDF Copy


Scott-Morton F., F. Zettelmeyer, and J. Silvia-Risso, "Internet Car Retailing," Journal of Industrial Economics, 49 (2001), 501-520. PDF Copy


Scott-Morton F., F. Zettelmeyer, and J. Silvia-Risso, "Consumer Information and Price Discrimination: Does the Internet Affect the Pricing of New Cars to Women and Minorities?," Quantitative Marketing and Economics, 1 (2003), 65-92. PDF Copy


Smith, M., "The Impact of Shopbots on Electronic Markets," Journal of the Academy of Marketing Science, 30 (2002) 442-450. PDF Copy


Smith, M. and E. Brynjolfsson, "Consumer Decision-making at an Internet Shopbot: Brand Still Matters," Journal of Industrial Economics, 49 (2001), 541-558. PDF Copy


Smith, M., J. Bailey, and E. Brynjolfsson, "Understanding Ditigal Markets: Review and Assessment," MIT, September 1999. (The paper is forthcoming in Understanding the Digital Economy, E. Brynjolfsson and B. Kahin, eds., MIT Press.) PDF Copy


Stahl, D. O., "Oligopolistic Pricing with Sequential Consumer Search," American Economic Review, 79 (1989), 700-712. PDF Copy


Subramani, M. and E. Walden, "The Dot Com Effect: The Impact of E-Commerce Announcements on the Market Value of Firms," Information Systems Research, 12 (2001), 135-154. PDF Copy


Telang, R., T. Mukhopdhyay, and R. Wilcox, "An Empirical Analysis of Internet Search Engine Choice," Carnegie Mellon University, December 2001. PDF Copy


UCLA/USC Internet Report: 2001 Report, 2002 Report, 2004 Report


Wang, S., W. Jank, and G. Shmueli, "Forecasting eBay's Online Auction Prices using Functional Data Analysis," U. of Maryland, Robert H. Smith School of Business, December 2004. PDF Copy


Wiseman, A. E., "Economic Perspectives on the Internet," Bureau of Economics, Federal Trade Commission, July 2000. PDF Copy


Zettelmeyer, F., F. Scott Morton, and J. Silvia-Risso, "Cowboys or Cowards: Why are Internet Prices Lower?," Yale University, March 2004. PDF Copy


Zettelmeyer, F., F. Scott Morton, and J. Silvia-Risso, "How the Internet Lowers Prices: Evidence from Matched Survey and Auto Transactions Data," NBER Working Paper 11515, June 2005. PDF Copy


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