Consumer surplus and the Internet

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


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.


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