Prices and Price Dispersion on the Web: Evidence from the Online Book Industry / Karen Clay, Ramayya Krishnan, Eric Wolff.

Format:

Book

Author/Creator:

Clay, Karen.

Contributor:

National Bureau of Economic Research.

Krishnan, Ramayya.

Wolff, Eric.

Series:

Working Paper Series (National Bureau of Economic Research) no. w8271.

NBER working paper series no. w8271

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Other Title:

Prices and Price Dispersion on the Web

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2001.

Summary:

Using data collected between August 1999 and January 2000 covering 399 books, including New York Times bestsellers, computer bestsellers, and random books, we examine pricing by thirty-two online bookstores. One common prediction is that the reduction in search costs on the Internet relative to the physical channel would cause both price and price dispersion to fall. Over the sample period, we find no change in either price or price dispersion. Another prediction of the search literature is that the prices and price dispersion of advertised items or items that are purchased repeatedly will be lower than for unadvertised or infrequently purchased items. Prices across categories of books appear to conform to this prediction, with New York Times bestsellers having the lowest prices as a fraction of the publisher's suggested price and random books having the highest prices. Interestingly, price dispersion does not conform with this prediction, apparently for reasons related to stores' decisions to carry particular books. One reason why we may not observe convergence in prices is because stores have succeeded in differentiating themselves even though they are selling a commodity product. We observe differentiation (or attempted differentiation) by a significant number of firms.

Notes:

Print version record

May 2001.