Cannibalization or Market Expansion? The Impact of E-Books on Print Book Sales
49 Pages Posted: 4 Jun 2015
Date Written: February 20, 2015
E-book sales have experienced rapid growth in the past few years, yet their impact on print book sales remains unclear. This paper empirically investigates the cannibalization and market expansion effects of e-books. Using individual-level transaction data from 2008 to 2012, we estimate a dynamic structural model of consumer e-reader adoption and subsequent book purchases, including quantity, reading format (e-book or print book), and retailer choices in a number of book categories. We emphasize in the model the role of consumers’ self-selection into buying e-readers based on heterogeneous book tastes. We find that on average, 42% of e-book sales come from cannibalizing print book sales and 58% come from market expansion. Among the cannibalization effect, offline bookstores bear 53% of the cannibalization loss, while Amazon bears 32% and other online retailers bear 15%. We discuss how the impact of e-books would change under counterfactual pricing scenarios using the estimated demand system.
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