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Market structure and market performance in e-commerce

Author

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  • Hackl, Franz
  • Kummer, Michael E.
  • Winter-Ebmer, Rudolf
  • Zulehner, Christine

Abstract

We investigate the effect of market structure on market performance in the market for consumer electronics. This research is novel, because we exploit product life cycle information to build an instrumental variable for the number of firms in a market, a variable which hitherto had to be treated as exogenous in comparable studies on seller-behavior in e-commerce. We combine data from Austria's largest online site for price comparisons with retail-data on whole sale prices provided by a major hardware producer for consumer electronics. We observe input prices of firms, and all their moves in the entry and the pricing game. Using this information for 80 digital cameras, we generate instrumental variables based on the shops' entry decisions in the past. We find that instrumenting is particularly important for estimating the effect of competition on the markup of the price-leader.

Suggested Citation

  • Hackl, Franz & Kummer, Michael E. & Winter-Ebmer, Rudolf & Zulehner, Christine, 2011. "Market structure and market performance in e-commerce," ZEW Discussion Papers 11-084, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  • Handle: RePEc:zbw:zewdip:11084
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    References listed on IDEAS

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    Cited by:

    1. Harkonen, Janne & Haapasalo, Harri & Hanninen, Kai, 2015. "Productisation: A review and research agenda," International Journal of Production Economics, Elsevier, vol. 164(C), pages 65-82.
    2. repec:eee:indorg:v:52:y:2017:i:c:p:30-62 is not listed on IDEAS
    3. repec:taf:oabmxx:v:4:y:2017:i:1:p:1405509 is not listed on IDEAS

    More about this item

    Keywords

    retailing; product life cycle; market structure; market performance; markup; price dispersion;

    JEL classification:

    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L81 - Industrial Organization - - Industry Studies: Services - - - Retail and Wholesale Trade; e-Commerce
    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection

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