How Competitive Are Internet Book Retailers?

Judy Chevalier
How competitive are Internet book retailers? Only a few years ago, lofty valuations of Amazon.com and other Internet retailers were justified by the suggestion that consumers would be very loyal to Internet vendors. Skeptics argued that with price information so easily available on the Internet, Internet retailing would deteriorate to perfect price competition. In "Measuring Prices and Price Competition Online: Amazon vs. Barnes and Noble," we examine which of these views are more accurate. We find that the typical consumer shopping at Amazon.com is, in fact, fairly insensitive to price, while the typical consumer at bn.com is substantially more price sensitive.