Tuesday, January 4, 2011
The Impact of the Internet on Retail Competition: Evidence from Technological Differences in Internet Access
Posted by D. Daniel Sokol
Georg Gebhardt (University of Munich) provides research on The Impact of the Internet on Retail Competition: Evidence from Technological Differences in Internet Access.
ABSTRACT: Does the internet increase competition? To address this question, I exploit two institutional details unique to Germany: (1) Some municipalities received glass fibre cables that cannot be upgraded to DSL; I use these municipalities as a treatment group with reduced online competition. (2) German law mandates resale price maintenance for books; I compare three retailing sectors, electronics (price competition), books (no price competition), and food (no online sales), to identify the effect of price competition: The effect of price competition is highly significant. Full broadband access reduces offline electronics retailers’ producer rents by 1.5 percent per year from 1999 to 2007.