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.

Using data collected between August, 1999, and January, 2000, covering 399 books, we examine pricing by thirty‐two online United States‐based bookstores. At the aggregate level, we find that both advertising and competitive structure had the predicted effects. More competition led to lower prices and to lower price dispersion. Holding competitive structure constant, more widely advertised items also had lower prices. At the firm level, we observe considerable heterogeneity in behavior. Firms had differentiated (or attempted to differentiate) on dimensions such as brand, price, and selection.

This paper presents an aging analysis of 741 high yield bonds and finds default, exchange, and call percentages substantially higher than reported in earlier studies. By December 31, 1988, cumulative defaults are 34 percent for bonds issued in 1977 and 1978 and range from 19 to 27 percent for issue years 1979–1983 and from 3 to 9 percent for issue years 1984–1986. Exchanges are also a significant factor although they often are followed by default. Moreover, a significant percentage of high yield debt, 26–47 percent for 1977–1982, has been called. By December 31, 1988, approximately one third of the bonds issued in 1977–1982 has defaulted or been exchanged, and an additional one third had been called. On average, only 28 percent of these issues are still outstanding. There is no evidence that early results for more recent issue years differ markedly from issue years 1977 to 1982.

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Using data collected between August 1999 and January 2000, we examine firm-level pricing strategies for 32 online bookstores. The data cover more than 300 books, including New York Times bestsellers, computer bestsellers, and random books. Over the period, standard deviation of price fell slightly, and prices for the different types of books were substantially above cost and flat or increasing. Thus predicted price convergence has not yet occurred. An average firm priced random paperback nonfiction books at 94 percent of the cover price and offered substantial discounts (19%-6%) for current and former bestsellers on the New York Times list and the Amazon computer list, small (4%) discounts for hardcover books, and substantial (11%) discounts for fiction books. Significant variation in pricing policies across stores, however, suggests that some firms offer differentiated products and that other firms follow dominated pricing policies.