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American Economic Journal: Microeconomics: Vol. 4 No. 3 (August 2012)

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Shopping Cost and Brand Exploration in Online Grocery

Article Citation

Pozzi, Andrea. 2012. "Shopping Cost and Brand Exploration in Online Grocery." American Economic Journal: Microeconomics, 4(3): 96-120.

DOI: 10.1257/mic.4.3.96

Abstract

This paper compares consumers' brand exploration when shopping online versus in a brick-and-mortar store. I use a new scanner dataset to compare the behavior of households shopping online and in-store at the same chain, for identical items and prices. I find that brand exploration is more prevalent in-store. My model quantifies the role of features of e-commerce, like the existence of "favorites lists" and the difficulty in verifying item quality. Limited exploration online implies higher barriers to entry on the Internet channel. Counterfactual exercises suggest that online advertising could make the Internet channel more competitive. (JEL D12, L11, L81, M31, M37)

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Authors

Pozzi, Andrea (EIEF, Rome)

JEL Classifications

D12: Consumer Economics: Empirical Analysis
L11: Production, Pricing, and Market Structure; Size Distribution of Firms
L81: Retail and Wholesale Trade; e-Commerce
M31: Marketing
M37: Advertising

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