Document Type
Discussion Paper
Publication Date
11-1-2016
CFDP Number
2054R
CFDP Revision Date
2017-06-01
CFDP Pages
73
Abstract
Online retail gives consumers access to an astonishing variety of products. However, the additional value created by this variety depends on the extent to which local retailers already satisfy local demand. To quantify the gains and account for local demand, we use detailed data from an online retailer and propose methodology to address a common issue in such data - sparsity of local sales due to sampling and a significant number of local zeros. Our estimates indicate products face substantial demand heterogeneity across markets; as a result, we find gains from online variety that are 30% lower than previous studies.
Recommended Citation
Quan, Thomas W. and Williams, Kevin R., "Product Variety, Across-Market Demand Heterogeneity, and the Value of Online Retail" (2016). Cowles Foundation Discussion Papers. 2513.
https://elischolar.library.yale.edu/cowles-discussion-paper-series/2513