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The Impact of Online Sales on Consumers and Firms: Evidence from Household Appliances

Author

Listed:
  • Nestor Duch-Brown

    () (European Commission - JRC)

  • Lukasz Grzybowski

    () (Telecom Paris Tech)

  • Frank Verboven

    () (Katholieke Universiteit Leuven)

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 some market expansion effect but also a considerable sales diversion. Second, we ask who benefited most from online sales: consumers or firms. We find that consumers benefited more, which 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 international price differences for identical products are larger in the traditional channel than online. However, there is still substantial market segmentation in the online channel between the EU countries. The introduction of e-commerce therefore did not influence price levels and price dispersion in the traditional channel.

Suggested Citation

  • Nestor Duch-Brown & Lukasz Grzybowski & Frank Verboven, 2015. "The Impact of Online Sales on Consumers and Firms: Evidence from Household Appliances," JRC Working Papers on Digital Economy 2015-15, Joint Research Centre (Seville site).
  • Handle: RePEc:ipt:decwpa:2015-15
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    File URL: https://ec.europa.eu/jrc/en/publication/eur-scientific-and-technical-research-reports/impact-online-sales-consumers-and-firms-evidence-household-appliances
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    Citations

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    Cited by:

    1. Helfrich, Magdalena & Herweg, Fabian, 2017. "Salience in Retailing: Vertical Restraints on Internet Sales," CEPR Discussion Papers 11948, C.E.P.R. Discussion Papers.
    2. 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).
    3. Markus Dertwinkel-Kalt & Mats Köster, 2017. "Salience and Online Sales: The Role of Brand Image Concerns," CESifo Working Paper Series 6787, CESifo Group Munich.
    4. Nestor Duch-Brown, 2017. "The competitive landscape of online platforms," JRC Working Papers on Digital Economy 2017-04, Joint Research Centre (Seville site).

    More about this item

    Keywords

    e-commerce; online sales; substitution; consumer welfare; nested logit;

    JEL classification:

    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L68 - Industrial Organization - - Industry Studies: Manufacturing - - - Appliances; Furniture; Other Consumer Durables
    • L86 - Industrial Organization - - Industry Studies: Services - - - Information and Internet Services; Computer Software

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