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Competition in B2C eCommerce: Analytical Issues and Empirical Evidence

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Author Info

  • Stefan W. Schmitz

    (ICE, Austrian Academy of Sciences)

  • Michael Latzer

    (ICE, Austrian Academy of Sciences)

Abstract

This paper questions the widely held view that B2C eCommerce markets are characterised by a high intensity of competition, using a mixture of theoretical arguments and empirical evidence. We discuss two hypothesis and survey empirical studies which test them. We argue that the goods sold in B2C eCommerce have to be interpreted as heterogeneous “composite goods”, that market transparency in B2C eCommerce is lower than widely assumed, and that high endogenous sunk costs limit the intensity of competition in B2C eCommerce.

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File URL: http://128.118.178.162/eps/io/papers/0211/0211001.pdf
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Bibliographic Info

Paper provided by EconWPA in its series Industrial Organization with number 0211001.

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Length: 27 pages
Date of creation: 04 Nov 2002
Date of revision:
Handle: RePEc:wpa:wuwpio:0211001

Note: Type of Document - pdf; prepared on wordfile on mac; pages: 27; figures: none. Revised version submitted to Electronic Markets
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Web page: http://128.118.178.162

Related research

Keywords: Electronic commerce; competition; market structure; endogenous sunk costs;

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References

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  1. Baylis, Kathy & Perloff, Jeffrey M., 2001. "Price Dispersion on the Internet: Good Firms and Bad Firms," Institute for Research on Labor and Employment, Working Paper Series qt2t0770rn, Institute of Industrial Relations, UC Berkeley.
  2. Yannis Bakos, 2001. "The Emerging Landscape for Retail E-Commerce," Journal of Economic Perspectives, American Economic Association, vol. 15(1), pages 69-80, Winter.
  3. Yannis Bakos & Erik Brynjolfsson, 1997. "Bundling Information Goods: Pricing, Profits and Efficiency," Working Paper Series 199, MIT Center for Coordination Science.
  4. Clay, Karen, et al, 2002. "Retail Strategies on the Web: Price and Non-price Competition in the Online Book Industry," Journal of Industrial Economics, Wiley Blackwell, vol. 50(3), pages 351-67, September.
  5. Michael Smith & Erik Brynjolfsson, 1999. "Frictionless Commerce? A Comparison of Internet and Conventional Retailers," Computing in Economics and Finance 1999 1022, Society for Computational Economics.
  6. Jeffrey R. Brown & Austan Goolsbee, 2000. "Does the Internet Make Markets More Competitive?," NBER Working Papers 7996, National Bureau of Economic Research, Inc.
  7. Severin Borenstein & Garth Saloner, 2001. "Economics and Electronic Commerce," Journal of Economic Perspectives, American Economic Association, vol. 15(1), pages 3-12, Winter.
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Cited by:
  1. Häring, Julia, 2003. "Different Prices for Identical Products? Market Efficiency and the Virtual Location in B2C E-Commerce," ZEW Discussion Papers 03-68, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.

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