Beneficial showrooming under online vs. offline asymmetric information and price competition

Brick-and-mortar retailers invest in expert sales assistance to solve consumer uncertainty about product features. In contrast, online retailers offer a lower price attracting customers visiting brick-and-mortar stores to end their purchases online (showrooming). Online channel as a crucial information source attracts part of consumers enjoying online shopping before the purchase, which develops more complex browse-and-switch behaviors. Little literature models the effect of asymmetric information disclosure competition on consumers' learning behavior and pricing competition. Hence, we model information provision and price competition between an online and an offline retailer with showrooming behavior. First, we find that higher-value information disclosure by online retailers intensifies pre-sale information and price competition through an analysis of the Nash pricing game, reducing profits for both parties. Then, by comparing a showrooming with a non-showrooming scenario, we find that the showrooming effect may be harmful or positive, depending on consumers uncertainty problems for different types of products. Finally, we extend our approach to model the hybrid-channel shopping behavior in the learning and purchase stages. We find that they gather information from both stores only when they are highly unaware of the product. Hybrid shopping behavior triggers competition and harms both retailers.