Working Paper: NBER ID: w30802
Authors: Erik Brynjolfsson; Long Chen; Xijie Gao
Abstract: E-commerce sales have grown rapidly worldwide, massively increasing the availability of new products. We examine data from the largest digital platform in China and find that the number of book titles almost doubled, prices fell somewhat, and most new books are sold to consumers with unusual tastes. Demand for these niche products was significantly more inelastic than that of mass products. Embedding the estimates of demand elasticity into a two-segment CES framework, we find the welfare gain from increased variety was about 40 times the gain from lower prices and that rural consumers enjoyed the largest gains.
Keywords: No keywords provided
JEL Codes: O0
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| increase in the number of book titles available on the platform (Y92) | enhances consumer welfare (D18) |
| 1% increase in price for mass products (F61) | 19% decrease in quantity sold for mass products (F61) |
| 1% increase in price for niche products (F61) | 15% decrease in quantity sold for niche products (F61) |
| increase in product variety (L15) | welfare gain from product variety (D69) |
| rural consumers (R22) | larger welfare gains from product variety (D69) |