Ranking - Katalysatorn bakom Strategisk Prissättning

Abstract: The growing expansion of price comparison sites, where shops are compared and ranked in order of lowest prices, has contributed to reduced friction and transaction costs for consumers. Previous research in this field of study has primarily relied on examining the relationships between ranking and consumers’ demand for the resellers’ products. This thesis investigates and explains whether companies actively price their products differently after their rankings have changed. To answer this question, I use data from the price comparison site Prisjakt and test the hypotheses using a modification of a regression discontinuity and ordinary least squares design. The analysis shows that a change of ranking has a significant effect on the price. Furthermore, larger businesses are distinguished to adjust their prices to a greater extent after these rank changes. These pricing strategies are discussed from a game theoretical perspective with attention to the tit-for-tat strategy, where this strategy shows tendences of a market where ranking changes among the top-ranked positions are stagnating.