Prices and Price Dispersion on the Web: Evidence from the Online Book Industry

Authors: Clay, Karen1; Krishnan, Ramayya; Wolff, Eric2

Source: Journal of Industrial Economics, Volume 49, Number 4, December 2001 , pp. 521-539(19)

Publisher: Blackwell Publishing

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Abstract:

Using data collected between August, 1999, and January, 2000, covering 399 books, we examine pricing by thirty-two online United States-based bookstores. At the aggregate level, we find that both advertising and competitive structure had the predicted effects. More competition led to lower prices and to lower price dispersion. Holding competitive structure constant, more widely advertised items also had lower prices. At the firm level, we observe considerable heterogeneity in behavior. Firms had differentiated (or attempted to differentiate) on dimensions such as brand, price, and selection.

Document Type: Original article

DOI: 10.1111/1467-6451.00161

Affiliations: 1: Heinz School of Public Policy and Management, Carnegie Mellon University, Pittsburgh, Pennsylvania 15213, USA, 2: Graduate School of Industrial Administration, Carnegie Mellon University, Pittsburgh, Pennsylvania 15213, USA

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