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

17 Pages Posted: 13 May 2003

See all articles by Karen Clay

Karen Clay

Carnegie Mellon University - H. John Heinz III School of Public Policy and Management; National Bureau of Economic Research (NBER)

Ramayya Krishnan

Carnegie Mellon University - H. John Heinz III School of Public Policy and Management

Eric Wolff

affiliation not provided to SSRN

Danny Fernandes

Carnegie Mellon University

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.

Suggested Citation

Clay, Karen B. and Krishnan, Ramayya and Wolff, Eric D. and Fernandes, Danny, Retail Strategies on the Web: Price and Non-Price Competition in the Online Book Industry. Journal of Industrial Economics, Vol. 50, pp. 351-367, 2002. Available at SSRN: https://ssrn.com/abstract=330411

Karen B. Clay (Contact Author)

Carnegie Mellon University - H. John Heinz III School of Public Policy and Management ( email )

Pittsburgh, PA 15213-3890
United States

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Ramayya Krishnan

Carnegie Mellon University - H. John Heinz III School of Public Policy and Management ( email )

Pittsburgh, PA 15213-3890
United States

Eric D. Wolff

affiliation not provided to SSRN

Danny Fernandes

Carnegie Mellon University ( email )

Pittsburgh, PA 15213-3890
United States

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