Photo by Andrew Dobrowolskyj
by Brad Hunter
Asymmetric pricing occurs when retailers raise prices quickly in response
to cost increases, but lower prices slowly in response to cost decreases.
Only consumers dont call this asymmetric pricing, they usually call
When it comes to online businesses, however, there is still a good deal
of mystery, said marketing professor Sourav Ray, the lead investigator
of an ongoing study on asymmetric pricing in e-commerce.
In e-commerce, we really dont know yet if there is asymmetric
pricing going on, which is why this study is important, he said.
E-commerce is presumed to function more efficiently than the traditional
channel due to factors such as lower infrastructure costs. However, if
asymmetric pricing is occurring and these efficiencies are not passed
on to consumers in terms of lower prices, it raises a whole host of questions
Rays study of asymmetric pricing is part of a larger project, Harnessing
the Web - Inter-action Cycle for Canadian Competitiveness, which
is examining how consumers interact with e-commerce sites. Its findings
will be used to recommend ways of improving the competitiveness of Canadian
Average people and academics view asymmetric pricing differently, Ray
In fact, theory suggests that there is an incentive for retailers
to lower prices, since lower prices attract more customers.
If asymmetric pricing is taking place, we can examine the distribution
channel to determine where and why its happening. Suppose we move
from the interface between the consumer and retailer and go up the distribution
channel to the interface between the retailer and wholesaler.
The projects findings are set to be released in August 2005.