Does Amazon Exercise its Market Power? Evidence from Toys R Us
31 Pages Posted: 27 Aug 2021
Date Written: August 24, 2021
Since its founding, Amazon has established a reputation for being consumer friendly by consistently offering low prices. However, recent antitrust concerns about dominant online platforms have revived questions about whether Amazon uses its market share to exploit consumers. Using the sudden U.S. exit of Toys R Us as a natural experiment, we find that Amazon's prices increased by almost 5% in the wake of the exit, with larger increases for popular products most likely stocked by Toys R Us. Thus, despite Amazon's long-standing reputation for low prices, it may exploit increases in market power as traditional retailers cease operating.
Keywords: Amazon, Market Structure, Pricing
JEL Classification: D40, L10, L81
Suggested Citation: Suggested Citation