NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Match Quality, Search, and the Internet Market for Used Books

Glenn Ellison, Sara Fisher Ellison

NBER Working Paper No. 24197
Issued in January 2018
NBER Program(s):Industrial Organization

This paper examines the effect of the Internet on markets in which match-quality is important, including an analysis of the market for used books. A model in which sellers of unusual objects wait for high-value buyers to arrive brings out match quality and competition effects through which improved search technologies may increase both price dispersion and social welfare. A reduced-form empirical analysis finds support for a number of more nuanced predictions of the model in the context of the used book market, exploiting both cross-sectional differences across books and time-series differences in the wake of Amazon's acquisition and incorporation of a large used book marketplace. The paper develops a framework for structural estimation of a model based on the theory. The estimates suggest that the shift to Internet sales substantially increased both seller profits and consumer surplus.

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Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w24197

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