Our model builds on the work of Narasimhan (1988) and
Varian (1980). Whereas Varian considers many symmetric
firms and Narasimhan studies two asymmetric firms, we
analyze a market with three asymmetric firms and multiple
switcher segments. Switcher segments among multiple,
asymmetric firms are not components of prior models,
which makes our research unique. For conventional retailers,
it is easy to imagine that not all customers will be
informed of all prices because of the high cost associated
with searching prices. In an Internet setting, however,
search costs are relatively low. We can reasonably assume
that at least some customers are highly informed about
online prices, even for low-cost items (Carlton and Chevalier
2001; Koça¸s 2002; Smith and Brynjolfsson 2001).
However, this assumption does not preclude multiple segments
of switchers who do not compare prices among every
retailer. Even with price comparison engines, not all retailers
are listed, and not all customers use price comparison
sites (Iyer and Pazgal 2003; Montgomery et al. 2004).
Asymmetric awareness of retailers by price-sensitive
switchers may lead to different pricing strategies (Pan,
Ratchford, and Shankar 2004).