Journal
QME-QUANTITATIVE MARKETING AND ECONOMICS
Volume 1, Issue 2, Pages 203-222Publisher
SPRINGER
DOI: 10.1023/A:1024634613982
Keywords
internet; retail; perfect competition; price indices; elasticity
Funding
- National Science Foundation [SES 9984567]
- Sloan Foundation
- American Bar Foundation
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Despite the interest in measuring price sensitivity of online consumers, most academic work on Internet commerce is hindered by a lack of data on quantity. In this paper we use publicly available data on the sales ranks of about 20,000 books to derive quantity proxies at the two leading online booksellers. Matching this information to prices, we can directly estimate the elasticities of demand facing both merchants as well as create a price index for online books. The results show significant price sensitivity at both merchants but demand at BarnesandNoble.com is much more price-elastic than is demand at Amazon.com. The data also allow us to estimate the magnitude of bias in the CPI due to the rise of Internet sales.
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