Abstract

http://ssrn.com/abstract=320275
 
 

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Citations (44)



 


 



Measuring Prices and Price Competition Online: Amazon and Barnes and Noble


Austan Goolsbee


University of Chicago - Booth School of Business; National Bureau of Economic Research (NBER)

Judith A. Chevalier


Yale School of Management; National Bureau of Economic Research (NBER)

July 2002

NBER Working Paper No. w9085

Abstract:     
Despite the interest in measuring price sensitivity of online consumers, most academic work on Internet commerce is hindered by a lack of data on quantity. In this paper we use publicly available data on the sales ranks of about 20,000 books to derive quantity proxies at the two leading online booksellers. Matching this information to prices, we can directly estimate the elasticities of demand facing both merchants as well as create a consumer price index for online books. The results show significant price sensitivity at both merchants but demand at Barnes and Noble is much more price-elastic than is demand at Amazon. The data also allow us to estimate the magnitude of retail outlet substitution bias in the CPI due to the rise of Internet sales. The estimates suggest that prices online are much more variable than the CPI, which understates inflation by more than double in one period and gets the sign wrong in another.

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Date posted: July 26, 2002  

Suggested Citation

Goolsbee, Austan and Chevalier, Judith A., Measuring Prices and Price Competition Online: Amazon and Barnes and Noble (July 2002). NBER Working Paper Series, Vol. w9085, pp. -, 2002. Available at SSRN: http://ssrn.com/abstract=320275

Contact Information

Austan Goolsbee (Contact Author)
University of Chicago - Booth School of Business ( email )
5807 S. Woodlawn Avenue
Chicago, IL 60637
United States
773-702-5869 (Phone)
773-702-0458 (Fax)
National Bureau of Economic Research (NBER)
1050 Massachusetts Avenue
Cambridge, MA 02138
United States
Judith A. Chevalier
Yale School of Management ( email )
135 Prospect Street
P.O. Box 208200
New Haven, CT 06520-8200
United States
National Bureau of Economic Research (NBER)
1050 Massachusetts Avenue
Cambridge, MA 02138
United States
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