Product Variety, Across-Market Demand Heterogeneity, and the Value of Online Retail

Thomas W. Quan and Kevin Williams
Additional contact information
Thomas W. Quan: University of Georgia

No 2054, Cowles Foundation Discussion Papers from Cowles Foundation for Research in Economics, Yale University

Abstract: Online retail gives consumers access to an astonishing variety of products. However, the additional value created by this variety depends on the extent to which local retailers already satisfy local demand. To quantify the gains and account for local demand, we use detailed data from an online retailer and propose methodology to address a common issue in such data - sparsity of local sales due to sampling and a significant number of local zeros. Our estimates indicate products face substantial demand heterogeneity across markets; as a result, we find gains from online variety that are 30% lower than previous studies.

Keywords: Product Variety; Demand Estimation; Long Tail; Online Retail (search for similar items in EconPapers)
JEL-codes: C13 L67 L81 (search for similar items in EconPapers)
Pages: 69 pages
Date: 2016-11
New Economics Papers: this item is included in nep-com, nep-ict, nep-ind and nep-mkt
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (16)

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Related works:
Working Paper: Product Variety, Across-Market Demand Heterogeneity, and the Value of Online Retail (2017)
Working Paper: Product Variety, Across-Market Demand Heterogeneity, and the Value of Online Retail (2017)
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