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Online competition : examining competition between online and dual-channel retailers in the Norwegian electronics market

Håland, Tone
Master thesis
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URI
http://hdl.handle.net/11250/2560466
Date
2018
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  • Master Thesis [4207]
Abstract
The purpose of this thesis is to explore competition among retailers online. Online retailing

has grown significantly in recent years and is expected to keep growing. Simultaneously,

traditional brick-and-mortar retailers are experiencing less growth. Many traditional brickand-mortar

retailers have chosen to adapt by entering the online channel, becoming dualchannel

retailers. It is generally anticipated that the online channel is more competitive than

traditional brick-and-mortar retailing, due to lower search costs, technology and barriers to

entry. As dual-channel retailers operate in both markets, we wish to examine how this will

affect their prices. We test the hypothesis of online efficiency through looking at the price

levels and dispersion of online and dual-channel retailers.

We use a quantitative research methodology to examine whether online and dual-channel

retailers prices are different. Using price data from various retailers within the electronics

industry, we look at price levels and price dispersion to study competition between the retailer

types. The results show that the prices of online and dual-channel retailers are significantly

different. However, the results were the opposite of what we predicted, given the theory. We

found that dual-channel retailers have significantly lower prices and lower price dispersion

compared to online retailers. The results do not therefore support the existence of an online

disutility cost, or the notion of online channel efficiency.

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