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Competition in B2C eCommerce: Analytical Issues and Empirical Evidence

Author

Listed:
  • 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.

Suggested Citation

  • Stefan W. Schmitz & Michael Latzer, 2002. "Competition in B2C eCommerce: Analytical Issues and Empirical Evidence," Industrial Organization 0211001, EconWPA.
  • 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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    File URL: http://econwpa.repec.org/eps/io/papers/0211/0211001.pdf
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    References listed on IDEAS

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    1. Kathy Baylis & Jeffrey Perloff, 2002. "Price Dispersion on the Internet: Good Firms and Bad Firms," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 21(3), pages 305-324, November.
    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. Jeffrey R. Brown & Austan Goolsbee, 2000. "Does the Internet Make Markets More Competitive?," NBER Working Papers 7996, National Bureau of Economic Research, Inc.
    4. 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.
    5. Yannis Bakos & Erik Brynjolfsson, 1999. "Bundling Information Goods: Pricing, Profits, and Efficiency," Management Science, INFORMS, vol. 45(12), pages 1613-1630, December.
    6. 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 351-367, September.
    7. Severin Borenstein & Garth Saloner, 2001. "Economics and Electronic Commerce," Journal of Economic Perspectives, American Economic Association, vol. 15(1), pages 3-12, Winter.
    Full references (including those not matched with items on IDEAS)

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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.

    More about this item

    Keywords

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

    JEL classification:

    • L - Industrial Organization
    • L - Industrial Organization

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