TY  - JOUR
AU  - Goolsbee,Austan
AU  - Chevalier,Judith
TI  - Measuring Prices and Price Competition Online: Amazon and Barnes and Noble
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 9085
PY  - 2002
Y2  - July 2002
UR  - http://www.nber.org/papers/w9085
L1  - http://www.nber.org/papers/w9085.pdf
N1  - Author contact info:
Austan Goolsbee
Booth School of Business
University of Chicago
5807 S. Woodlawn Avenue
Chicago, IL 60637
Tel: 773/702-5869
Fax: 773/702-0458
E-Mail: goolsbee@chicagobooth.edu

Judith A. Chevalier
Yale School of Management
135 Prospect Street
New Haven, CT  06520
Tel: 203/432-3122
Fax: NA
E-Mail: judith.chevalier@yale.edu
AB  - Despite the interest in measuring price sensitivity of online consumers, most academic work on Internet commerce is hindered by a lack of data on quantity.  In this paper we use publicly available data on the sales ranks of about 20,000 books to derive quantity proxies at the two leading online booksellers.  Matching this information to prices, we can directly estimate the elasticities of demand facing both merchants as well as create a consumer price index for online books.  The results show significant price sensitivity at both merchants but demand at Barnes and Noble is much more price-elastic than is demand at Amazon.  The data also allow us to estimate the magnitude of retail outlet substitution bias in the CPI due to the rise of Internet sales.  The estimates suggest that prices online are much more variable than the CPI, which understates inflation by more than double in one period and gets the sign wrong in another.
ER  -