E-Commerce and the Market Structure of Retail Industries

Maris Goldmanis, Ali Hortacsu, Chad Syverson and Önsel Emre

Economic Journal, 2010, vol. 120, issue 545, 651-682

Abstract: This article examines the effect of the advent and diffusion of e-commerce on supply-side industry structure. We specify a general industry model involving consumers with differing search costs buying products from heterogeneous producers. We interpret e-commerce as a reduction in consumers' search costs. We show how it reallocates market shares from high-cost to low-cost producers. We test the model using US data for three industries: travel agencies, bookstores and new car dealers. Each industry exhibits the market share shifts predicted by the model but the mechanisms vary, ranging from aggregate factors in the travel industry to local-market factors in the other two industries. Copyright © The Author(s). Journal compilation © Royal Economic Society 2009.

Date: 2010
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Related works:
Working Paper: E-commerce and the Market Structure of Retail Industries (2008)
Working Paper: E-commerce and the Market Structure of Retail Industries (2005)
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