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Selling an opaque product through an intermediary: The case of disguising one's product

Authors
Publisher
Elsevier Inc.
Publication Date
Volume
84
Issue
1
Identifiers
DOI: 10.1016/j.jretai.2008.01.005
Keywords
  • Opaque Products
  • Pricing
  • Channels
  • Intermediaries
  • Hotwire
  • Priceline
  • E-Commerce

Abstract

Abstract This paper models multiple service providers who use an intermediary to sell an opaque product. An opaque product is a product whose identity is concealed from consumers until after purchase. I find that an opaque good may allow finer segmentation of a service provider's customer base, lead to market expansion, and/or reduce price rivalry. However, if there is little brand-loyalty in an industry, an opaque good increases the degree of price rivalry and reduces total industry profit. The paper also discusses issues regarding channel structure and outlines managerial implications of this research.

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