Dividing Online and Offline: A Case Study
37 Pages Posted: 17 Jul 2006
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Dividing Online and Offline: A Case Study
Dividing Online and Offline: A Case Study
Date Written: June 19, 2006
Abstract
Every new method of trade offers an opportunity for economic agents to compare its costs and benefits relative to the status quo. Such comparison motivates sorting across market segments and reshapes the whole marketplace. The Internet provides an excellent example: it introduces substantial search cost savings over brick and mortar retail stores but imposes new obstacles for sellers to convey quality. Using sportscard trading as a case study, we provide empirical evidence on (1) the sorting of product quality between the online and offline segments, (2) the changes for retail outlets after the Internet came into place, and (3) how supporting industries such as professional grading and card manufacturing adapted to take advantage of the new market.
Keywords: Search cost, online trading, asymmetric information, professional grading
JEL Classification: D40, D50, D82, D83, L10, L15, C93
Suggested Citation: Suggested Citation
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