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

Clay, Karen; Krishnan, Ramayya; Wolff, Eric; Fernandes, Danny

doi:10.1111/1467-6451.00181

Cited by 234 publications

(183 citation statements)

References 12 publications

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“…Brynjolfsson and Smith (2000) find substantial dispersion for prices of books and CDs on the Internet, to an extent that is roughly comparable to that in offline markets. Clay et al (2003) report similar findings for the online book market. Chevalier and Goolsbee (2003) find that book prices are much more variable online than in retail stores.…”

Section: Related Literaturesupporting

confidence: 69%

Has the Internet Eliminated Regional Price Differences? Evidence from the Used Car Market

Haan

Boer

2010

De Economist

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SummaryWe study the effects of the Internet on regional price differences. Comparing two Dutch regions, we find that before the rise of the Internet, price differences of used cars between those regions amounted to some 11-15%, controlling for mileage, age, fuel type and engine volume. These price differences have completely disappeared after the rise of the Internet, in particular a website that allows consumers to make detailed comparisons between almost all used cars for sale in the Netherlands.

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Section: Related Literaturesupporting

confidence: 69%

Has the Internet Eliminated Regional Price Differences? Evidence from the Used Car Market

Haan

Boer

2010

De Economist

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“…We have reproduced their table in this paper as Table 2, with modifications. Although some studies have found that online price dispersion is higher than offline price dispersion (e.g., Bailey 1998, Erevelles et al 2001, Clay et al 2002, others have found that online dispersion is lower than offline dispersion (e.g., Scott-Morton et al 2001, Ancarani and Shankar (2004) (standard deviation) Chellappa et al 2007 Scholten andSmith (2002) Source. Pan et al (2004) with modifications.…”

Section: Theory and Hypothesismentioning

confidence: 99%

Using Transaction Prices to Re-Examine Price Dispersion in Electronic Markets

Ghose

Yao

2011

Information Systems Research

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P rice dispersion is an important indicator of market efficiency. Internet-based electronic markets have the potential to reduce transaction and search costs, thereby creating more efficient, "frictionless" markets, as predicted by theories in information economics. However, earlier work has reported significant levels of price dispersion on the Internet, which is in contrast to theoretical predictions. A key feature of the existing stream of work has been its use of posted prices to estimate price dispersion. In theory, this can lead to an overestimation of price dispersion because a sale may not have occurred at the posted price. In this research, we use a unique data set of actual transaction prices collected from both the electronic and offline markets of buyers in a businessto-business market to evaluate the extent of price dispersion. We find that price dispersion in the electronic market is as low as 0.22%, which is substantially less than that reported in the existing literature. This near-zero price dispersion suggests that in some electronic markets the "law of one price" can prevail when we consider transaction prices, instead of posted prices. We further develop a theoretical framework that identifies several new drivers of price dispersion using transaction data. In particular, we focus on four product-level and market-level attributes-product cost, order cycle time, own price elasticity, and transaction quantity, and we estimate their impact on price dispersion. We also examine the electronic market's moderating role in the relationship between these drivers and price dispersion. Finally, we estimate the efficiency gains that accrue from transactions in the relatively friction-free market and find that the electronic market can enhance consumer surplus by as much as $97.92 million per year.

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“…For example, Clay, Krishnan, and Wolff (2001) find that competition leads to lower prices and lower price dispersion, and that widely advertised items have lower prices. Clay, Krishnan, Wolff, and Fernandes (2002) find that even though the average prices are similar between online and physical stores, price dispersion is greater for the former, indicating that online firms do not charge the same prices. Chevalier and Goolsbee (2003) use reported sales ranks to proxy quantity and estimate demand and price indices for books sold at the Amazon and Barnes & Noble websites.…”

Section: General and Academic Publishingmentioning

confidence: 79%

A textbook example of international price discrimination

et al. 2007

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We investigate differences in book prices between the United States and other countries. We find that general audience books are similarly priced internationally, but textbooks are substantially more expensive in the United States (often more than double the price). This disparity is much more pronounced for commercial publishers than for university presses. We argue that supply-side factors like cost and market structure can not explain this phenomenon. We discuss several demand-side explanations; our preferred theory is that higher US textbook prices reflect the unique status of the textbook as a centerpiece of US college instruction.

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

Cited by 234 publications

References 12 publications

Has the Internet Eliminated Regional Price Differences? Evidence from the Used Car Market

Has the Internet Eliminated Regional Price Differences? Evidence from the Used Car Market

Using Transaction Prices to Re-Examine Price Dispersion in Electronic Markets

A textbook example of international price discrimination

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