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Market structure and market performance in e-commerce

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  • Hackl, Franz
  • Kummer, Michael E.
  • Winter-Ebmer, Rudolf
  • Zulehner, Christine

Abstract

We investigate the effect of market structure on market performance in the market for consumer electronics. This research is novel, because we exploit product life cycle information to build an instrumental variable for the number of firms in a market, a variable which hitherto had to be treated as exogenous in comparable studies on seller-behavior in e-commerce. We combine data from Austria's largest online site for price comparisons with retail-data on whole sale prices provided by a major hardware producer for consumer electronics. We observe input prices of firms, and all their moves in the entry and the pricing game. Using this information for 80 digital cameras, we generate instrumental variables based on the shops' entry decisions in the past. We find that instrumenting is particularly important for estimating the effect of competition on the markup of the price-leader.

Suggested Citation

  • Hackl, Franz & Kummer, Michael E. & Winter-Ebmer, Rudolf & Zulehner, Christine, 2012. "Market structure and market performance in e-commerce," ZEW Discussion Papers 11-084 [rev.], ZEW - Leibniz Centre for European Economic Research.
    • Handle: RePEc:zbw:zewdip:11084r
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    1. Rizov, Marian & Vecchi, Michela & Domenech, Josep, 2022. "Going online: Forecasting the impact of websites on productivity and market structure," Technological Forecasting and Social Change, Elsevier, vol. 184(C).
    2. Harkonen, Janne & Haapasalo, Harri & Hanninen, Kai, 2015. "Productisation: A review and research agenda," International Journal of Production Economics, Elsevier, vol. 164(C), pages 65-82.
    3. Franz Hackl & Michael Hölzl‐Leitner & Rudolf Winter‐Ebmer & Christine Zulehner, 2021. "Successful retailer strategies in price comparison platforms," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 42(5), pages 1284-1305, July.
    4. Ehsan Mousavi Khaneghah & Nosratollah Shadnoush & Amin Salem, 2017. "Artemis time: A mathematical model to calculate maximum acceptable waiting time in B2C e-commerce," Cogent Business & Management, Taylor & Francis Journals, vol. 4(1), pages 1405509-140, January.
    5. Pérez-Amaral, Teodosio & Valarezo, Angel & López, Rafael & Garín-Muñoz, Teresa & Herguera, Iñigo, 2020. "E-commerce by individuals in Spain using panel data 2008–2016," Telecommunications Policy, Elsevier, vol. 44(4).
    6. Franz Hackl & Michael Hölzl-Leitner & Rudolf Winter-Ebmer & Christine Zulehner, 2018. "Success of firm strategies in e-commerce," Economics working papers 2018-10, Department of Economics, Johannes Kepler University Linz, Austria.
    7. Pérez-Amaral, Teodosio & Valarezo, Angel & López, Rafael & Garín-Muñoz, Teresa & Herguera, Iñigo, 2019. "E-commerce and digital divide in Spain using individual panel data 2008-2016," 30th European Regional ITS Conference, Helsinki 2019 205206, International Telecommunications Society (ITS).
    8. Fernández-Bonilla, Fernando & Gijón, Covadonga & De la Vega, Bárbara, 2022. "E-commerce in Spain: Determining factors and the importance of the e-trust," Telecommunications Policy, Elsevier, vol. 46(1).
    9. Pantano, Eleonora & Vannucci, Virginia, 2019. "Who is innovating? An exploratory research of digital technologies diffusion in retail industry," Journal of Retailing and Consumer Services, Elsevier, vol. 49(C), pages 297-304.
    10. Gonzalo Wandosell & María Concepción Parra-Meroño & Raul Baños, 2019. "Online Store Locator: An Essential Resource for Retailers in the 21st Century," Social Sciences, MDPI, vol. 8(2), pages 1-13, February.
    11. Duch-Brown, Néstor & Grzybowski, Lukasz & Romahn, André & Verboven, Frank, 2017. "The impact of online sales on consumers and firms. Evidence from consumer electronics," International Journal of Industrial Organization, Elsevier, vol. 52(C), pages 30-62.

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    More about this item

    Keywords

    Retailing; Product Life Cycle; Market Structure; Market Performance; Markup; Price Dispersion;
    All these keywords.

    JEL classification:

    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L81 - Industrial Organization - - Industry Studies: Services - - - Retail and Wholesale Trade; e-Commerce
    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection

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