Digital economy Essay Example | Topics and Well Written Essays - 3000 words

Digital economy - Essay Example With the recent technological boom, electronic businesses and markets have no doubt, flourished. The example of digital entertainment like MP3’s, e-books, availability of various soft wares for download and videos for streaming are only some examples of the phenomenal growth of the digital market. When markets come into play, whether they are digital or physical, price automatically becomes a crucial feature. It is important for consumers because they expect to buy at the least price, it is important for producers because they expect to sell at the highest price while maximizing profits and it is very important for the market as a whole in order to keep resource allocation efficient. One area of interest which scholars have long debated over, in relation to the digital economy, has been with respect to prices. A large amount of literature has been written in evidence of showing the presence/absence of price dispersions in online pricing, the reasons why such a phenomenon occurs and how significant it is in relation to modern retail outlets; traditional, pure-Internet based and multi-channel retail outlets (land based retail presence as well as an internet presence of the retailer). At this point it is important to define the phenomenon of Price dispersion. Pan, Ratchford and Shankar (2004, p.443) define price dispersion as â€Å"the distribution of prices (such as range and standard deviation) of an item with the same measured characteristics across sellers of the item at a given point in time†. In simpler words, it may be defined as the difference of prices among sellers of the same items. This concept has major implications for the retailing outlets as it acts as a cue for assessing their own pricing strategies and is reflective of what strategies their competitors have adopted. Be it the traditional, pure Internet or multi-channel retailer, the degree of price variances among the