Prices in a shopbot market

Shopbots are Internet agents that automatically search for information pertaining to price and quality goods and services. We study the impact on prices and price dispersion of such software agents. It is shown that price dispersion is a phenomenon which is independent of heterogeneity in E-tailers characteristics that is even if E-tailers provide the same service offerings, price dispersion remains whenever a captive market exists. Moreover, an increase in information does not reduce price dispersion but in general will increase it. © 2005 Springer Science + Business Media, Inc.