PhD student's work on price comparison websites featured in The Economist

Research on the subject of price comparison websites by a PhD student from the Department has been featured in The Economist.

David Ronayne, a PhD student and teaching fellow at Warwick, previously received much media coverage a few months back for his paper ‘Price Comparison Websites’.

His work has now been featured in The Economist in an article about the potential hidden costs of price comparison websites. David’s research suggests that the existence of price comparison websites may be bad for consumers and that they may in fact push prices up not down.

The research involved creating a mathematical model which allowed him to compare a market before and after the introduction of comparison websites. The work concentrates on whether the fees charged by such sites, which ends up embedded in consumers’ bills, outweighs the increased competitive pressure they place on the firms selling on them.

The analysis highlighted two crucial factors; firstly how many comparison sites there are and secondly how many of them consumers are checking.

He explained:

Even if there are many competing websites, if consumers only check one of the sites each, it is no better than if there were monopoly and prices rise for all consumers.

I found that only in the unlikely case where people who use these sites check every single one of them, is it guaranteed that they will benefit from the existence of the industry.”

Professor Abhinay Muthoo, Head of Department and Co-director of the Warwick Policy Lab, passed on his congratulations to David by saying:

The article about price comparison websites heavily draws on David’s work and is in the high-profile 'Free Exchange' column which is dedicated to the discussion of academic research.

It is very rare to see solo PhD student work cited in this way so this is excellent news for David in securing such impact of his research.”

View the full Economist article; 'Costly comparison'.