Does Amazon Exercise its Market Power? Evidence from Toys R Us

31 Pages Posted: 27 Aug 2021

See all articles by Leshui He

Leshui He

Bates College

Imke Reimers

Northeastern University - Department of Economics

Benjamin Shiller

Brandeis University - Department of Economics

Date Written: August 24, 2021

Abstract

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

He, Leshui and Reimers, Imke and Shiller, Benjamin, Does Amazon Exercise its Market Power? Evidence from Toys R Us (August 24, 2021). Available at SSRN: https://ssrn.com/abstract=3910636 or http://dx.doi.org/10.2139/ssrn.3910636

Leshui He

Bates College ( email )

Pettengill Hall
Bates College
Lewiston, ME 04240
United States

Imke Reimers

Northeastern University - Department of Economics ( email )

301 Lake Hall
Boston, MA 02115
United States

Benjamin Shiller (Contact Author)

Brandeis University - Department of Economics ( email )

Waltham, MA 02454-9110
United States
781-736-5205 (Phone)

HOME PAGE: http://benjaminshiller.com

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