Price dispersion on the internet: A review and directions for future research

The explosive growth in Internet retailing has sparked a stream of research on online price dispersion, defined as the distribution of prices (such as range and standard deviation) of an item with the same measured characteristics across sellers of the item at a given point in time. In this paper, we review the empirical and analytical literature on online price dispersion and outline the future directions in this research stream. We address the issue of whether price dispersion is greater or smaller online than off-line, examine whether price dispersion on the Internet has changed over time, discuss multichannel retailing and measurement of price dispersion, explore why Internet price dispersion exists, and investigate the drivers of online price dispersion.