Amazon and Online Competitor Prices: The Role of Shipping Costs in a Hybrid Platform Environment

Abstract

This analysis compares Amazon bestseller prices to competitor prices of identical products, sold both on Amazon Marketplace and in the entire online market space outside the Amazon platform. Amazon prices relative to all its competitors, or only those on Amazon marketplace, are generally widely dispersed, and both higher and lower. Crucially, the sign of the average percentage price difference tends to reverse depending on the inclusion or exclusion of shipping costs into prices. Comparing only prices of Amazon Marketplace sellers and outside online competitors, the median percentage difference is zero but substantially less dispersed. Shipping costs may also reverse the sign of the percentage price difference. These findings can help to assess platform-related pricing strategies under antitrust law.

Keywords: Amazon pricing, online retailers, relative price distribution, percentage price difference distribution

JEL Classification: L11, L12, L4, D4