Overview of Price and Nonprice Competition

Abstract

When supply is drastically modified by new technology, it takes on a dimension of shock, resulting in models that contain incomplete information content and more challenging exogenous and endogenous phenomena. We identify new demand parameters for the industry. Consumers can now comparison-shop for bargains and choose between different ways to read books and allocate their time. These options determine their consumption and human capital formation. While technological advances in this industry are now at the General Purpose level, their role still seems unsettled. Advancement in the book industry is of the modern endogenous growth type associated with increasing returns as capital accumulates. The resulting competitive behavior between firms adheres to discriminating pricing in an imperfect market structure within the new global technological environment.