By Juan Miguel Pedraza
The more bewildering the problem, the more focused are Susan Chen’s efforts to tease up answers. An economist in UND’s College of Business and Public Administration, Chen specializes in firm strategy, firm behavior, and consumer choices in various markets, especially on the Internet. In other words, she examines marketplace behavior and tells us what it means.
The goal of my research is to solve puzzles in the real world,” said Chen, who studied management information systems (MIS) in China and worked as a network administrator before getting her Ph.D. in economics. “Currently, I engage in both empirical and theoretical studies in different interesting research areas.”
Take Internet pricing, for example.
“I look at what is happening on the Internet and analyze the competitiveness of online markets for price information,” Chen explained. One project involves studying statistical differences in the airfares sold at different online travel sites.
“I find that after controlling for ticket availability and difference among vendors that affect ticket prices, there is little systematic difference in the average fares,” she said.
The bottom line, Chen notes: Comparison shopping online doesn’t guarantee you a deal, whether you’re shopping for your next trip to Cancun or a sweater for Aunt Shirley.
Chen’s research also clearly shows that economic rules operate in the digital world, too.
“I discovered that vertical integration in online markets reduces price competition,” she said. In technical terms, she added, such a merger only benefits the integrated parties and competing sellers; however, it’s not so good for consumers. This finding explains, among other things, why antitrust authorities scrutinized Orbitz — the online travel agent — when it was still jointly owned by the five major airlines.
t’s just like the “real” world: the bigger the company and the more it controls the product line from source to store, the less likely it is that you’re going to find a bargain there, Chen said.
“I’m also looking at the competitiveness of Best Buy’s low-price guarantee (LPG),” Chen continued. To address this question, Chen developed a theoretical model to quantify the competitiveness of LPGs. Then she compares average prices before and after the LPG policy.
“I find that the observed policy change is pro-competitive: average prices decline and price dispersion rises post-change,” said Chen, who’s also studying the consumer electronics market, online advertisements, and bundling strategies.
There’s nothing dismal about the so-called “dismal science” of economics, Chen remarked.
“There are abundant interesting issues to address in economics,” she said. “For me, research ideas may arise from a conversation with colleagues, a news article, or sometimes simply experience from everyday life.”