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The impact of online sales on consumers and firms. Evidence from consumer electronics

Author

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  • Duch-Brown, Néstor
  • Grzybowski, Lukasz
  • Romahn, André
  • Verboven, Frank

Abstract

In this paper we estimate a differentiated products demand model to ask three questions regarding the introduction of e-commerce. First, we ask whether the online distribution channel has increased total sales, or only diverted sales from traditional channels. We find that there is a market expansion effect but also a considerable sales diversion. Second, we ask to which extent consumers and firms benefited from the introduction of the online sales channel. We find that consumers benefited proportionately more, and this is entirely due to the appearance of an additional distribution channel and not due to increased competition. Third, we ask how the online channel has affected European market integration. We find that price differences between the EU countries for identical products are large both in the traditional channel and online. Therefore, the introduction of e-commerce did not influence price levels and international price dispersion in the traditional channel.

Suggested Citation

  • Duch-Brown, Néstor & Grzybowski, Lukasz & Romahn, André & Verboven, Frank, 2017. "The impact of online sales on consumers and firms. Evidence from consumer electronics," International Journal of Industrial Organization, Elsevier, vol. 52(C), pages 30-62.
  • Handle: RePEc:eee:indorg:v:52:y:2017:i:c:p:30-62
    DOI: 10.1016/j.ijindorg.2017.01.009
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    References listed on IDEAS

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    Cited by:

    1. Helfrich, Magdalena & Herweg, Fabian, 2017. "Salience in Retailing: Vertical Restraints on Internet Sales," Annual Conference 2017 (Vienna): Alternative Structures for Money and Banking 168276, Verein für Socialpolitik / German Economic Association.
    2. Markus Dertwinkel-Kalt & Mats Köster, 2017. "Salience and Online Sales: The Role of Brand Image Concerns," CESifo Working Paper Series 6787, CESifo Group Munich.
    3. Alex Coad & Nestor Duch-Brown, 2017. "Barriers to European cross-border E-commerce," JRC Working Papers on Digital Economy 2017-03, Joint Research Centre (Seville site).

    More about this item

    Keywords

    Online sales; Offline sales; Nested logit; BLP;

    JEL classification:

    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L63 - Industrial Organization - - Industry Studies: Manufacturing - - - Microelectronics; Computers; Communications Equipment
    • L81 - Industrial Organization - - Industry Studies: Services - - - Retail and Wholesale Trade; e-Commerce

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