Competition among Experts via Face-to-Face and Online Channels

Online experts increasingly compete against traditional, face-to-face experts by offering many consulting and customer services. In turn, some traditional high-quality experts consider offering online services to defend their markets. In this research, we investigate how a traditional high-quality expert should modify its business model to respond to the new competition arising due to the Internet. We find that the Internet impacts the high-quality traditional expert more adversely than the low-quality traditional expert due to losses in the second opinion market. If the online transaction costs are low, the online expert with an intermediate quality charges a lower price and obtains a higher profit compared to the traditional highquality expert.