For consumers shopping online, it’s easy to find what they’re looking for to match the products more precisely to their specific needs and to compare prices. This is especially true for homogeneous goods such as CDs, books and software, but also for more complex products such as flights and mortgages.

Suppose you want to buy a music CD on the web. There are two ways to do this. You can either use a standard search engine like Yahoo, Google, type what you want and get a long list of sites visited and ask each of them,”manual”to find the price of the CD. This can be very time consuming, and realistically, you will be able to verify only a few of these sites. But it is still probably better than trawling round shops or by telephone, so there may be significant transaction cost savings from buying

A more efficient alternative is to hire a”ShopBot “. Here you can select the category”music CD “, type name, and let the ShopBot visit many places,’interrogate them to find the price, and return with the lowest price (or a comprehensive list of prices starting with the cheapest). If you were to shop for the CD in real shops, you will need to spend time to visit or call the shop to find out the price.

Consumers certainly benefit from shopping online. But there are also significant benefits for retailers. For a start, the sellers can benefit from reduced search costs to monitor each others’s pricing behavior and may even be able to maintain higher prices.

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