Paper Info
Title
Online Product Reviews-Triggered Dynamic Pricing: Theory And Evidence
Abstract
Prior works offer compelling evidence that, on the demand side of the market, user-generated online product reviews play a very important role in informing consumers' purchase decisions. On the supply side, however, the interplay between online product reviews and firm strategies is less understood. We build an analytical model that differentiates products based on consumers' preference for tastes (horizontal differentiation) or quality (vertical differentiation) and show that a firm is able to not only manipulate its pricing to influence online product reviews (thus influencing sales) but also, adjust pricing dynamically in response to online word of mouth. Our model derives rich and testable results on possible price trajectories. To offer empirical support for the analytical predictions, we conduct a panel data study of prices and reviews. We adopt a difference-in-differences framework to address endogeneity challenges.
Year
DOI
Venue
2019
10.1287/isre.2019.0852
INFORMATION SYSTEMS RESEARCH
Keywords
Field
DocType
pricing, online product reviews, analytical model, empirical study
Panel data,Endogeneity,Economics,Vertical differentiation,Dynamic pricing,Monopolistic competition,Product reviews,Big data,Marketing,Empirical research
Journal
Volume
Issue
ISSN
30
4
1047-7047
Citations 
PageRank 
References 
0
0.34
0
Authors
3
Name
Order
Citations
PageRank
Feng Juan1349.96
Xin Li226122.36
Xiaoquan (Michael) Zhang310823.28