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On the competition between an online bookstore and a physical bookstore |
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| Authors: | Chih-Peng Chu Wen-Chung Guo Fu-Chuan Lai |
| Affiliation: | 1. Department of Business Administration, National Dong Hwa University, 1, Section 2, Da-Hsueh Road, Shou-Feng, Hualien, 97401, Taiwan 2. Department of Economics, National Taipei University, 151, University Rd., San-Shia, Taipei, 23741, Taiwan 3. Research Center for Humanities and Social Sciences, Academia Sinica and Department of Public Finance, National Chengchi University, Nankang, Taipei, 11529, Taiwan |
| Abstract: | This study examines the relative competitiveness of online and physical bookstores. Online bookstores have the advantage of being able to provide a wide range of books while minimizing inventory costs, but customers must wait several days for their books. Physical bookstores allow consumers to immediately obtain their books, but consumers must pay a transportation cost to visit the store. We can find the condition such that online bookstores charge a lower price than physical bookstores and take a larger market share, and attract a higher proportion of consumers who prefer variety. The implication of the welfare analysis is also discussed. |
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