Market Structure and Market Performance in E-Commerce

Franz Hackl (), Michael Kummer, Rudolf Winter-Ebmer and Christine Zulehner

No 2014-04, Economics working papers from Department of Economics, Johannes Kepler University Linz, Austria

Abstract: We analyze the interaction between market structure and market performance and how it varies over the product cycle. To account for the potential endogeneity in this relation, we use an instrumental variable approach. We combine data from the largest Austrian online market for price comparisons with retail data on wholesale prices provided by a major hardware producer for consumer electronics. Our results show that instrumenting is important for estimating the empirical effect of competition on the markup of the price leader. One more firm in the market is associated with a reduction of the price leader’s markup which is equivalent to competition between existing firms for an additional three weeks in the product life cycle. Our results support search theoretic models and contradict models of monopolistic competition. Moreover our results support the existence of price dynamics over the product cycle. They also highlight the substitutability between newly innovated and old expiring technologies and how it varies with respect to competitors’ and own brand innovations.

Keywords: Retailing; Product Life cycle; Market Structure; Market Performance; Markup; Price Dispersion (search for similar items in EconPapers)
JEL-codes: D43 L11 L13 L81 (search for similar items in EconPapers)
Pages: 45 pages
Date: 2014-01
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 (11)

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http://www.econ.jku.at/papers/2014/wp1404.pdf (application/pdf)

Related works:
Journal Article: Market structure and market performance in E-commerce (2014)
Working Paper: Market Structure and Market Performance in E-Commerce (2012)
Working Paper: Market Structure and Market Performance in E-Commerce (2012)
Working Paper: Market Structure and Market Performance in E-Commerce (2012)
Working Paper: Market structure and market performance in e-commerce (2012)
Working Paper: Market structure and market performance in e-commerce (2011)
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Persistent link: https://EconPapers.repec.org/RePEc:jku:econwp:2014_04

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