Retail Strategies on the Web: Price and Non-price Competition in the Online Book Industry

Authors: Clay, Karen¹; Krishnan, Ramayya²; Wolff, Eric³; Fernandes, Danny⁴

Source: Journal of Industrial Economics, Volume 50, Number 3, September 2002 , pp. 351-367(17)

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Abstract:

Two conflicting predictions have emerged regarding the effect of low-cost information on price. The first states that all Internet retailers will charge the same low price for mass produced goods. The second states that Internet retailers will differentiate to avoid intense price competition. Using data collected in April 1999 on the prices of 107 books in thirteen online and two physical bookstores, we find similar average prices online and in physical stores and substantial price dispersion online. Analysis of product differentiation yields no clear results. The substantial premium charged by Amazon provides indirect evidence of product differentiation.

Document Type: Original article

DOI: http://dx.doi.org/10.1111/1467-6451.00181

Affiliations: 1: Carnegie Mellon University, Pennsylvania, USA kclay@andrew.cmu.edu 2: rk2x@andrew.cmu.edu 3: Carnegie Mellon University, Pennsylvania, USA wolff@andrew.cmu.edu 4: danny@andrew.cmu.edu

Publication date: 2002-09-01