TY  - JOUR
AU  - Clay,Karen
AU  - Krishnan,Ramayya
AU  - Wolff,Eric
TI  - Prices and Price Dispersion on the Web: Evidence from the Online Book Industry
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 8271
PY  - 2001
Y2  - May 2001
UR  - http://www.nber.org/papers/w8271
L1  - http://www.nber.org/papers/w8271.pdf
N1  - Author contact info:
Karen Clay
Heinz College
Carnegie Mellon University
5000 Forbes Avenue
Pittsburgh, PA 15213
Tel: 412/268-4197
Fax: 412/268-7357
E-Mail: kclay@andrew.cmu.edu

Ramayya Krishnan
E-Mail: rk2x@andrew.cmu.edu

Eric Wolff
AB  - Using data collected between August 1999 and January 2000 covering 399 books, including New York Times bestsellers, computer bestsellers, and random books, we examine pricing by thirty-two online bookstores. One common prediction is that the reduction in search costs on the Internet relative to the physical channel would cause both price and price dispersion to fall. Over the sample period, we find no change in either price or price dispersion. Another prediction of the search literature is that the prices and price dispersion of advertised items or items that are purchased repeatedly will be lower than for unadvertised or infrequently purchased items. Prices across categories of books appear to conform to this prediction, with New York Times bestsellers having the lowest prices as a fraction of the publisher's suggested price and random books having the highest prices. Interestingly, price dispersion does not conform with this prediction, apparently for reasons related to stores' decisions to carry particular books. One reason why we may not observe convergence in prices is because stores have succeeded in differentiating themselves even though they are selling a commodity product. We observe differentiation (or attempted differentiation) by a significant number of firms.
ER  -