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On the competition between an online bookstore and a physical bookstore

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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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Authors and Affiliations

  1. Department of Business Administration, National Dong Hwa University, 1, Section 2, Da-Hsueh Road, Shou-Feng, Hualien, 97401, Taiwan

    Chih-Peng Chu

  2. Department of Economics, National Taipei University, 151, University Rd., San-Shia, Taipei, 23741, Taiwan

    Wen-Chung Guo

  3. Research Center for Humanities and Social Sciences, Academia Sinica and Department of Public Finance, National Chengchi University, Nankang, Taipei, 11529, Taiwan

    Fu-Chuan Lai

Authors
  1. Chih-Peng Chu
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  2. Wen-Chung Guo
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  3. Fu-Chuan Lai
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Correspondence to Fu-Chuan Lai.

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Chu, CP., Guo, WC. & Lai, FC. On the competition between an online bookstore and a physical bookstore. Netnomics 13, 141–154 (2012). https://doi.org/10.1007/s11066-012-9068-y

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  • DOI: https://doi.org/10.1007/s11066-012-9068-y

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