Our analysis indicates that the
increased product variety of online bookstores enhanced consumer
welfare by $731 million to $1.03 billion in the year 2000, which is
between seven to ten times as large as the consumer welfare gain from
increased competition and lower prices in this market. There may also
be large welfare gains in other SKU-intensive consumer goods such as
music, movies, consumer electronics, and computer software and
hardware.
Here is the paper, the pointer is indirect through Tim Harford. Do read my previous post — relevant for the wage stagnation debate — on how much the Internet is worth.
Then Napster must have “enhanced consumer welfare” by at least $10 billion…
The estimates in this paper (from 2003) regarding product sales of niche books have, I believe, been acknowledged to be overestimates, even by enthusiasts of Internet shopping. See here for such an enthusiast.
All such estimates are hazardous because the statistical approaches do not give reliable estimates of the top 100 or so books, and these books can have a big influence on the overall statistics.
I recently came accross your blog and have been reading along. I thought I would leave my first comment. I dont know what to say except that I have enjoyed reading. Nice blog. I will keep visiting this blog very often.
Kate
http://educationonline-101.com
As efficiency gains from increased competition significantly enhance consumer surplus, for instance, by leading to lower average selling prices, it was shown that increased product
variety made available through electronic markets can be a significantly larger source of
consumer surplus gains.One reason for increased product variety on the Internet is the ability of online retailers to catalog, recommend, and provide a large number of products for sale.If it wasn’t for the internet security issue we might say that this was the perfect solution.But not yet.
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