The Value of Information in an Online Consumer Electronics Market∗

Consumers buying electronics products at the lowest prices on Shopper.com during 2000 and 2001 saved an average of 16 percent, compared to purchasing at the average listed price. Consistent with a variety of theories, the value of information depends on the size of the market. When two firms list prices, consumers save 11% by purchasing at the lowest price rather than the average price. These savings jump to 20% when more than 30 firms list prices. However, these potential savings accrue only to consumers on the “right side” of the “digital divide.” JEL Numbers: D4, D8, M3, L13.