Bing Jing

Most products comprise both digital and inspection attributes. For example, while the style of apparel and shoes can be conveyed online, assessing fit still requires personal inspection. In a discrete model of match, we examine the effects of webrooming in a duopoly. When the match probability of the digital attribute is sufficiently low, a counter-intuitive result is that webrooming increases both firms’ profits. Here the reason is that webrooming induces greater participation. This finding is thus opposite to the general impression from the popular press that webrooming intensifies competition by releasing more information. We then generalize this analysis to a model of continuous match values. Here, webrooming still increases both firms’ profits under broad conditions. The reason is that webrooming informs each consumer about her relative preference over the two firms’ digital attributes and, consequently, her optimal search sequence.

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