Exploratory Study Summary
The exploratory study presents evidence that supports the
hypotheses, indicating that a retailer’s SLR explains its
pricing behavior consistent with the model’s predictions.
The SLR is also adept at explaining whether small firms
take a high-priced or low-priced approach. For example, we
can explain why Worthy prices high and a1Books prices low, though both firms are small in the same homogeneous
goods market. We also test pricing strategies according to
the entire price dispersion curve by using tests of stochastic
dominance. The empirical literature has no clear consensus
on suitable price dispersion constructs (Pan, Ratchford, and
Shankar 2004). The stochastic dominance tests correspond
to the predicted theoretical relationships and represent a
more complete perspective on retailer price dispersion.