Abstract

With network economy springing up and communication technology expanding fast, the retailing channels composed of Internet retail channel become the choice of many traditional retailers. Price dispersion always exists between traditional retail channel and Internet retail channel. In this text, we bring forward the model about traditional retail channel and internet retail channel based on classical hotelling linear city model. We find the price dispersion will be different when the parameters affecting the price in Internet retail channel are different. In some conditions, the price in Internet retail channel will be lower than in traditional retail channel, but in other conditions, the price in Internet retail channel will be higher than in traditional retail channel.

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