A Measurement of Price Dispersion and Search Cost in China’s Online Stores

We studied a measurement of price dispersion and search cost to find implications of relative search cost. We investigated several models, including the classical search cost model, price dispersion estimation model and Stahl's consumers' gain model. According to the data we collected, the empirical analysis explores absolute search cost, relative search cost, consumers' gain from search, competitive prices, and comment-weighted gradings based on the settings. With the hypothesis that we clarified and statistics applications, this paper attempts to illustrate that price dispersion among online book retailers increases as price rises. Besides, we testified to the effects of information and discovered that online shopping isn't frictionless. Last, we tested the correlation between gradings and search cost to testify our conclusions. The results are statistically significant under a 5% p-value.