On the competition between an online bookstore and a physical bookstore

Chih-Peng Chu (), Wen-Chung Guo and Fu-Chuan Lai

Netnomics, 2012, vol. 13, issue 3, 141-154

Abstract: This study examines the relative competitiveness of online and physical bookstores. Online bookstores have the advantage of being able to provide a wide range of books while minimizing inventory costs, but customers must wait several days for their books. Physical bookstores allow consumers to immediately obtain their books, but consumers must pay a transportation cost to visit the store. We can find the condition such that online bookstores charge a lower price than physical bookstores and take a larger market share, and attract a higher proportion of consumers who prefer variety. The implication of the welfare analysis is also discussed. Copyright Springer Science+Business Media New York 2012

Keywords: Variety competition; Price competition; Online bookstores (search for similar items in EconPapers)
Date: 2012
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DOI: 10.1007/s11066-012-9068-y

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