Measuring Prices and Price Competition Online: Amazon and Barnes and Noble

Austan Goolsbee and Judith Chevalier

No 9085, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: 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 consumer price index for online books. The results show significant price sensitivity at both merchants but demand at Barnes and Noble is much more price-elastic than is demand at Amazon. The data also allow us to estimate the magnitude of retail outlet substitution bias in the CPI due to the rise of Internet sales. The estimates suggest that prices online are much more variable than the CPI, which understates inflation by more than double in one period and gets the sign wrong in another.

JEL-codes: L8 (search for similar items in EconPapers)
Date: 2002-07
New Economics Papers: this item is included in nep-mic and nep-net
Note: IO
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (39)

Published as Goolsbee, Austan and Judith Chevalier. “Measuring prices and price competition online: Amazon vs. Barnes and Noble." Quantitative Marketing and Economics I, 2 (June 2003).

Downloads: (external link)
http://www.nber.org/papers/w9085.pdf (application/pdf)

Related works:
Working Paper: Measuring Prices and Price Competition Online: Amazon and Barnes and Noble (2008)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:nbr:nberwo:9085

Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w9085

Access Statistics for this paper

More papers in NBER Working Papers from National Bureau of Economic Research, Inc National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.. Contact information at EDIRC.
Bibliographic data for series maintained by ().