Valuing Internet Retailers: Amazon and Barnes and Noble

Judith Chevalier and Austan Goolsbee

Yale School of Management Working Papers from Yale School of Management

Abstract: Many Internet retailers must raise margins in the future if they are to survive. This raises the important issues of whether they will be able to raise margins as well as how valuation estimates made today should evaluate projected changes to margins in the future. In this paper, we describe retail strategies of pricing for market share in growing markets and show how measures of the price elasticity of demand facing retailers in the current year can be combined with standard accounting variables to inform calculations about future margins. Our analysis suggests that the capital market projects greater future margin improvements for Amazon.com than for BN.com and that this may be due to Amazon benefiting from network effects.

JEL-codes: G12 L11 L13 L81 (search for similar items in EconPapers)
Date: 2003-10-02
New Economics Papers: this item is included in nep-net
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:ysm:somwrk:ysm416

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