E-commerce and prices - theory and evidence
This paper examines the relation between prices in conventional stores and on the Internet. Main results from the theoretical analysis are i) we expect a discrete fall in prices in conventional stores as the share of the population with access to Internet reaches a critical level, ii) the relation between prices depends on convenience costs of shopping in regular stores as well as on transport and navigation costs for goods bought over Internet, iii) retailers who only sell through Internet have lower on-line prices than retailers who also sell through conventional stores. The empirical section employs a rich data set covering the Swedish markets for books and CDs. Prices of these goods are on average 15 percent lower on Internet, but if a single item is bought transport costs will make it as expensive to buy over Internet as in a regular store (if a basket of goods is bought it is some 10 percent cheaper on Internet since transport costs are fixed). There is firm support for that retailers who only sell over Internet have lower on-line prices.
|Date of creation:||18 Jun 2000|
|Date of revision:||08 Sep 2000|
|Contact details of provider:|| Postal: The Economic Research Institute, Stockholm School of Economics, P.O. Box 6501, 113 83 Stockholm, Sweden|
Phone: +46-(0)8-736 90 00
Fax: +46-(0)8-31 01 57
Web page: http://www.hhs.se/
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Masahisa Fujita & Paul Krugman & Anthony J. Venables, 2001. "The Spatial Economy: Cities, Regions, and International Trade," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262561476, March.
- Anderson, Simon P & Ginsburgh, Victor A, 1999.
"International Pricing with Costly Consumer Arbitrage,"
Review of International Economics,
Wiley Blackwell, vol. 7(1), pages 126-39, February.
- ANDERSON, Simon P. & GINSBURGH, Victor A., . "International pricing with costly consumer arbitrage," CORE Discussion Papers RP 1373, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- 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.
- Erik Brynjolfsson & Michael D. Smith, 2000. "Frictionless Commerce? A Comparison of Internet and Conventional Retailers," Management Science, INFORMS, vol. 46(4), pages 563-585, April.
- Paul Klemperer, 1995. "Competition when Consumers have Switching Costs: An Overview with Applications to Industrial Organization, Macroeconomics, and International Trade," Review of Economic Studies, Oxford University Press, vol. 62(4), pages 515-539.
When requesting a correction, please mention this item's handle: RePEc:hhs:hastef:0389. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Helena Lundin)
If references are entirely missing, you can add them using this form.