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Competition in the Computer Industry: Online Versus Retail

In: E-commerce

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  • Austan Goolsbee

Abstract

This paper estimates the price sensitivity of individuals' choice of whether to buy computers online versus in retail stores using a new data source on the computer purchases of more than 20,000 people. The paper first fits hedonic regressions for the retail price of computers in a local area and then examines how that price influences the probability of buying online. The results indicate that the decision is sensitive to the relative price of retail computers and it varies by type of customer and type of computer. Conditional on buying a computer, the elasticity of buying remotely with respect to retail store prices is about 1.5. Copyright 2001 by Blackwell Publishing Ltd

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  • Severin Borenstein & Garth Saloner, 2001. "E-commerce," NBER Books, National Bureau of Economic Research, Inc, number bore01-1, May.
    This item is provided by National Bureau of Economic Research, Inc in its series NBER Chapters with number 12316.

    Handle: RePEc:nbr:nberch:12316

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    Cited by:
    1. Ginger Jin & Andrew Kato, 2004. "Dividing online and offline: A case study," Natural Field Experiments 00276, The Field Experiments Website.
    2. Khan, Beethika S., 2004. "Consumer Adoption of Online Banking: Does Distance Matter?," Department of Economics, Working Paper Series qt2bt1d76s, Department of Economics, Institute for Business and Economic Research, UC Berkeley.
    3. Arup Daripa & Sandeep Kapur, 2003. "Pricing on the Internet," Microeconomics 0312007, EconWPA.
    4. Luís Cabral, 2002. "Comments on Clemons, Hitt, Gu, Thatcher, and Weber," Journal of Financial Services Research, Springer, vol. 22(1), pages 91-93, August.
    5. Chun, Se-Hak & Kim, Jae-Cheol, 2005. "Analysis of price competition and strategic implications for heterogeneous market structure," International Review of Economics & Finance, Elsevier, vol. 14(4), pages 455-468.
    6. Glenn Ellison & Sara Fisher Ellison, 2009. "Tax Sensitivity and Home State Preferences in Internet Purchasing," American Economic Journal: Economic Policy, American Economic Association, vol. 1(2), pages 53-71, August.
    7. Lesley Chiou, 2005. "Empirical Analysis of Retail Competition: Spatial Differentiation at Wal-Mart, Amazon.com, and Their Competitors," Occidental Economics Working Papers 3, Occidental College, Department of Economics, revised Nov 2006.
    8. Glenn Ellison & Sara Fisher Ellison, 2006. "Internet Retail Demand: Taxes, Geography, and Online-Offline Competition," NBER Working Papers 12242, National Bureau of Economic Research, Inc.
    9. Andrea Pozzi, 2009. "Shopping Cost and Brand Exploration in Online Grocery," Working Papers 09-10, NET Institute, revised Sep 2009.
    10. Beethika Khan, 2004. "Consumer Adoption of Online Banking: Does Distance Matter?," Development and Comp Systems 0407002, EconWPA.
    11. Matthew Gentzkow, 2007. "Valuing New Goods in a Model with Complementarity: Online Newspapers," American Economic Review, American Economic Association, vol. 97(3), pages 713-744, June.
    12. Ricardo Ribeiro & João Vareda, 2007. "Crowding Out or Complementarity in the Telecommunications Market?," Working Papers 07-33, NET Institute, revised Sep 2007.
    13. Prince, Jeffrey T., 2007. "The beginning of online/retail competition and its origins: An application to personal computers," International Journal of Industrial Organization, Elsevier, vol. 25(1), pages 139-156, February.
    14. Anja Lambrecht & Katja Seim, 2006. "Adoption and Usage of Online Services in the Presence of Complementary Offline Services: Retail Banking," Working Papers 06-27, NET Institute, revised Oct 2006.
    15. Eiichiro Kazumori & John McMillan, 2003. "Selliing Online Versus Offline," Levine's Working Paper Archive 506439000000000254, David K. Levine.
    16. Kroft, Kory & Pope, Devin G., 2012. "Does Online Search Crowd Out Traditional Search and Improve Matching Efficiency? Evidence from Craigslist," CLSSRN working papers clsrn_admin-2012-35, Vancouver School of Economics, revised 30 Nov 2012.
    17. Garcia-Alonso, Maria del Carmen, 2003. "National-security export-quality restrictions in segmented and non-segmented markets," European Journal of Political Economy, Elsevier, vol. 19(2), pages 377-390, June.
    18. Michael R. Baye & John Morgan & Patrick Scholten, 2006. "Information, Search, and Price Dispersion," Working Papers 2006-11, Indiana University, Kelley School of Business, Department of Business Economics and Public Policy.
    19. Matthew Gentzkow, 2006. "Valuing New Goods in a Model with Complementarities: Online Newspapers," NBER Working Papers 12562, National Bureau of Economic Research, Inc.

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