IDEAS home Printed from https://ideas.repec.org/p/nbr/nberwo/8351.html
   My bibliography  Save this paper

Competition in the Computer Industry

Author

Listed:
  • Austan Goolsbee

Abstract

This paper estimates the relative price sensitivity of individuals' choice of whether to buy computers online versus in retail stores using a new data source on the computer purchase behavior of more than 20,000 people. To estimate the degree of competition between the two channels, the paper uses a two step approach. First, it fits hedonic regressions for the prices paid for a computer in a retail store as a function of characteristics. The coefficients on the city fixed effects in these regressions give a measure of the retail price level The second stage then looks at whether individuals purchase their computers in stores versus online as a function of the retail price and their own personal characteristics. The results indicate that the decision to buy remotely is sensitive to the relative price of computers in retail stores and that it varies by type of customer and type of computer. Conditional on buying a computer, the overall elasticity of buying remotely with respect to retail store prices is about 1.5.

Suggested Citation

  • Austan Goolsbee, 2001. "Competition in the Computer Industry," NBER Working Papers 8351, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:8351
    Note: IO PR
    as

    Download full text from publisher

    File URL: http://www.nber.org/papers/w8351.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Timothy F. Bresnahan & Shane Greenstein, 1999. "Technological Competition and the Structure of the Computer Industry," Journal of Industrial Economics, Wiley Blackwell, vol. 47(1), pages 1-40, March.
    2. Austan Goolsbee, 2000. "In a World Without Borders: The Impact of Taxes on Internet Commerce," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 115(2), pages 561-576.
    3. Fiona Scott Morton & Florian Zettelmeyer & Jorge Silva‐Risso, 2001. "Internet Car Retailing," Journal of Industrial Economics, Wiley Blackwell, vol. 49(4), pages 501-519, December.
    4. Jeffrey R. Brown & Austan Goolsbee, 2002. "Does the Internet Make Markets More Competitive? Evidence from the Life Insurance Industry," Journal of Political Economy, University of Chicago Press, vol. 110(3), pages 481-507, June.
    5. Goolsbee, Austan & Klenow, Peter J, 2002. "Evidence on Learning and Network Externalities in the Diffusion of Home Computers," Journal of Law and Economics, University of Chicago Press, vol. 45(2), pages 317-343, October.
    6. Jeffrey R. Brown & Austan Goolsbee, 2000. "Does the Internet Make Markets More Competitive?," NBER Working Papers 7996, National Bureau of Economic Research, Inc.
    7. Fiona Scott Morton & Florian Zettelmeyer & Jorge Silva-Risso, 2001. "Internet Car Retailing," NBER Chapters, in: E-commerce, pages 501-519, National Bureau of Economic Research, Inc.
    8. repec:bla:jindec:v:49:y:2001:i:4:p:501-19 is not listed on IDEAS
    9. Sridhar Balasubramanian, 1998. "Mail versus Mall: A Strategic Analysis of Competition between Direct Marketers and Conventional Retailers," Marketing Science, INFORMS, vol. 17(3), pages 181-195.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Kolko, Jed, 2010. "How broadband changes online and offline behaviors," Information Economics and Policy, Elsevier, vol. 22(2), pages 144-152, May.
    2. Kolko, Jed, 2006. "Why Should Governments Support Broadband Adoption?," MPRA Paper 3363, University Library of Munich, Germany.
    3. Beethika Khan, 2004. "Consumer Adoption of Online Banking: Does Distance Matter?," Development and Comp Systems 0407002, University Library of Munich, Germany.
    4. Anindya Ghose & Avi Goldfarb & Sang Pil Han, 2013. "How Is the Mobile Internet Different? Search Costs and Local Activities," Information Systems Research, INFORMS, vol. 24(3), pages 613-631, September.
    5. Florian Zettelmeyer & Fiona Scott Morton & Jorge Silva-Risso, 2005. "How the Internet Lowers Prices: Evidence from Matched Survey and Auto Transaction Data," NBER Working Papers 11515, National Bureau of Economic Research, Inc.
    6. Eymann, Torsten (Ed.), 2007. "Tagungsband zum Doctoral Consortium der WI 2007 [WI2007 Doctoral Consortium Proceedings]," Bayreuth Reports on Information Systems Management 24, University of Bayreuth, Chair of Information Systems Management.
    7. Ginger Zhe Jin & Andrew Kato, 2007. "Dividing Online and Offline: A Case Study," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 74(3), pages 981-1004.
    8. Khan, Beethika S., 2004. "Consumer Adoption of Online Banking: Does Distance Matter?," Department of Economics, Working Paper Series qt2bt1d76s, Department of Economics, Institute for Business and Economic Research, UC Berkeley.
    9. Erik Brynjolfsson & Astrid Dick & Michael Smith, 2010. "A nearly perfect market?," Quantitative Marketing and Economics (QME), Springer, vol. 8(1), pages 1-33, March.
    10. Yuxin Chen & Ganesh Iyer & V. Padmanabhan, 2002. "Referral Infomediaries," Marketing Science, INFORMS, vol. 21(4), pages 412-434, May.
    11. Ya-Ling Chiu & Jiangze Du & Jying-Nan Wang, 2022. "The Effects of Price Dispersion on Sales in the Automobile Industry: A Dynamic Panel Analysis," SAGE Open, , vol. 12(3), pages 21582440221, August.
    12. Fay, Scott, 2008. "Selling an opaque product through an intermediary: The case of disguising one's product," Journal of Retailing, Elsevier, vol. 84(1), pages 59-75.
    13. Genakos, Christos & Roumanias, Costas & Valletti, Tommaso, 2023. "Is having an expert “friend” enough? An analysis of consumer switching behavior in mobile telephony," Journal of Economic Behavior & Organization, Elsevier, vol. 213(C), pages 359-372.
    14. Erik Brynjolfsson & Yu (Jeffrey) Hu & Michael D. Smith, 2003. "Consumer Surplus in the Digital Economy: Estimating the Value of Increased Product Variety at Online Booksellers," Management Science, INFORMS, vol. 49(11), pages 1580-1596, November.
    15. Van Parys, Jessica & Brown, Zach Y., 2024. "Broadband Internet access and health outcomes: Patient and provider responses in Medicare," International Journal of Industrial Organization, Elsevier, vol. 95(C).
    16. Nestor Duch-Brown & Bertin Martens, 2014. "Consumer benefits from the EU Digital Single Market: evidence from household appliances markets," JRC Working Papers on Digital Economy 2014-03, Joint Research Centre (Seville site).
    17. Thomas W. Quan & Kevin R. Williams, 2016. "Product Variety, Across-Market Demand Heterogeneity, and the Value of Online Retail," Cowles Foundation Discussion Papers 2054, Cowles Foundation for Research in Economics, Yale University.
    18. Fiona Scott Morton, 2006. "Consumer Benefit from Use of the Internet," NBER Chapters, in: Innovation Policy and the Economy, Volume 6, pages 67-90, National Bureau of Economic Research, Inc.
    19. Backus, Matthew R. & Podwol, Joseph Uri & Schneider, Henry S., 2014. "Search costs and equilibrium price dispersion in auction markets," European Economic Review, Elsevier, vol. 71(C), pages 173-192.
    20. Michael R. Baye & John Morgan, 2009. "Brand and Price Advertising in Online Markets," Management Science, INFORMS, vol. 55(7), pages 1139-1151, July.

    More about this item

    JEL classification:

    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:nbr:nberwo:8351. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: the person in charge (email available below). General contact details of provider: https://edirc.repec.org/data/nberrus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.