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ONLINE CONSUMERS MAY NOT GET BEST DEALS, ECONOMIST FINDS

The holiday shopping season is here and more consumers, including President Clinton himself, are making purchases via the Internet this year. But according to one researcher, consumers may not always be getting the best deals via their home computers.

James V. Koch, president of Old Dominion University and an economist, warns that President Clinton and other Americans need to be aware that they may actually be paying higher prices for some goods and services purchased electronically. In his study, he notes that because of the immediate nature of the Internet, online sellers can adjust their prices on a daily basis.

"Lower prices, higher quality and better service are not inevitable outcomes when consumers utilize the Net to purchase goods and services," Koch said.

While it appears that society is better off because of the Internet - there are no long lines to wait in nor obnoxious salespeople to deal with - there's still the notion of "buyer beware."

"Smart usage of the Internet is not rocket science; for one who is untutored, however, Net usage can actually make a person worse off than before," Koch added.

Among other significant findings he has identified are:
·Internet sellers can change their prices more often, and by smaller amounts, than sellers in conventional markets.
·The Internet has produced more price dispersion in most markets.
·Data "mining" enables companies to accumulate massive amounts of data about consumers to help them engage in price discrimination.
·The Internet has caused a deterioration in the quality of goods and services in some markets.
·The idea that consumers can deal directly with manufacturers, and the "middleman" would be lost, has not occurred.

This article was posted on: December 9, 1999

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