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Amazon Effects in Canadian Online Retail Firm-Product-Level Data

Author

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  • Alex Chernoff

Abstract

I use firm-product-level data for Canadian online retailers to study how product scope (the average number of product categories per firm) evolved from 1999 to 2012. During this period, product scope dropped monotonically from 59 to 5 product categories. Using a theoretical model of multi-product firms, I show that this reduction can be rationalized by increased online competition. Consistent with the model, I find that the percentage of Canadian online retailers with revenues in a product category falls when Amazon.com expands its varieties in the category. Overall, Amazon.com’s expansion accounts for 37 percent of the observed reduction in product scope.

Suggested Citation

  • Alex Chernoff, 2019. "Amazon Effects in Canadian Online Retail Firm-Product-Level Data," Staff Working Papers 19-42, Bank of Canada.
    • Handle: RePEc:bca:bocawp:19-42
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    References listed on IDEAS

    as
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    4. Alberto Cavallo, 2018. "More Amazon Effects: Online Competition and Pricing Behaviors," NBER Working Papers 25138, National Bureau of Economic Research, Inc.
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    More about this item

    Keywords

    Firm dynamics; Service Sector;

    JEL classification:

    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L81 - Industrial Organization - - Industry Studies: Services - - - Retail and Wholesale Trade; e-Commerce

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