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Prices and Price Dispersion on the Web: Evidence from the Online Book Industry

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  • Karen Clay
  • Ramayya Krishnan
  • Eric Wolff

Abstract

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.

Suggested Citation

  • Karen Clay & Ramayya Krishnan & Eric Wolff, 2001. "Prices and Price Dispersion on the Web: Evidence from the Online Book Industry," Journal of Industrial Economics, Wiley Blackwell, vol. 49(4), pages 521-539, December.
    • Handle: RePEc:bla:jindec:v:49:y:2001:i:4:p:521-539
    DOI: 10.1111/1467-6451.00161
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