Premium
Retail Strategies on the Web: Price and Non–price Competition in the Online Book Industry
Author(s) -
Clay Karen,
Krishnan Ramayya,
Wolff Eric,
Fernandes Danny
Publication year - 2002
Publication title -
the journal of industrial economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.93
H-Index - 77
eISSN - 1467-6451
pISSN - 0022-1821
DOI - 10.1111/1467-6451.00181
Subject(s) - price dispersion , competition (biology) , product differentiation , the internet , product (mathematics) , mid price , economics , business , advertising , producer price index , industrial organization , commerce , marketing , price level , microeconomics , monetary economics , computer science , world wide web , mathematics , ecology , geometry , cournot competition , biology
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.