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Market Structure and Market Performance in E-Commerce

36 Pages Posted: 2 Feb 2012  

Franz Hackl

Johannes Kepler University Linz - Department of Economics

Michael E. Kummer

Georgia Institute of Technology; Centre for European Economic Research (ZEW), Mannheim; University of Mannheim - Center for Doctoral Studies in Economics and Management (CDSEM)

Rudolf Winter-Ebmer

Johannes Kepler University Linz - Department of Economics; Institute for Advanced Studies (IHS) - Department of Economics & Finance; Centre for Economic Policy Research (CEPR); IZA Institute of Labor Economics

Christine Zulehner

Goethe University Frankfurt - Research Center SAFE; Austrian Institute of Economic Research (WIFO); Goethe University Frankfurt - Department of Management and Applied Microeconomics

Multiple version iconThere are 2 versions of this paper

Date Written: December 22, 2011

Abstract

We investigate the effect of market structure on market performance in the market for consumer electronics. We exploit product life cycle information to build an instrumental variable for the number of firms in a market, a variable which hitherto had to be treated as exogenous in comparable studies on seller-behavior in e-commerce. We combine data from Austria's largest online site for price comparisons with retail data on wholesale prices provided by a major hardware producer for consumer electronics. We observe input prices of firms, and all their moves in the entry and the pricing game. Using this information for 70 digital cameras, we generate instrumental variables based on the shops' entry decisions in the past. We find that instrumenting is particularly important for estimating the effect of competition on the markup of the price leader.

Keywords: Retailing, Product Life Cycle, Market Structure, Market Performance, Markup, Price Dispersion

JEL Classification: L11, L13, L81, D43

Suggested Citation

Hackl, Franz and Kummer, Michael E. and Winter-Ebmer, Rudolf and Zulehner, Christine, Market Structure and Market Performance in E-Commerce (December 22, 2011). ZEW - Centre for European Economic Research Discussion Paper No. 11-084. Available at SSRN: https://ssrn.com/abstract=1991860 or http://dx.doi.org/10.2139/ssrn.1991860

Franz Hackl

Johannes Kepler University Linz - Department of Economics ( email )

Altenbergerstrasse 69
A-4040 Linz, 4040
Austria

HOME PAGE: http://www.economics.uni-linz.ac.at/hackl

Michael Kummer (Contact Author)

Georgia Institute of Technology ( email )

Atlanta, GA 30332
United States

Centre for European Economic Research (ZEW), Mannheim ( email )

P.O. Box 10 34 43
L 7,1
D-68034 Mannheim, 68034
Germany

HOME PAGE: http://https://sites.google.com/site/kummermannheim/

University of Mannheim - Center for Doctoral Studies in Economics and Management (CDSEM) ( email )

Mannheim, D-68131
Germany

Rudolf Winter-Ebmer

Johannes Kepler University Linz - Department of Economics ( email )

Altenbergerstrasse 69
A-4040 Linz, 4040
Austria
+43 732 2468 8236 (Phone)
+43 732 2468 8238 (Fax)

HOME PAGE: http://www.econ.jku.at/winter

Institute for Advanced Studies (IHS) - Department of Economics & Finance ( email )

Stumpergasse 56
A-1060 Vienna, A-1060
Austria

HOME PAGE: http://www.ihs.ac.at

Centre for Economic Policy Research (CEPR)

77 Bastwick Street
London, EC1V 3PZ
United Kingdom

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Christine Zulehner

Goethe University Frankfurt - Department of Management and Applied Microeconomics ( email )

Germany

Goethe University Frankfurt - Research Center SAFE ( email )

(http://www.safe-frankfurt.de)
Theodor-W.-Adorno-Platz 3
Frankfurt am Main, 60323
Germany

Austrian Institute of Economic Research (WIFO) ( email )

P.O. Box 91
Wien, A-1103
Austria

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