Emerging Tech

The Impact Of The Internet On Retail Competition: Evidence From Technological Differences In Internet Access

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Executive Summary

Does the internet increase competition? To address this question, the author exploits two institutional details unique to Germany: Some municipalities received glass fibre cables that cannot be upgraded to DSL; the author uses these municipalities as a treatment group with reduced online competition. German law mandates resale price maintenance for books; the author compares three retailing sectors, electronics (price competition), books (no price competition), and food (no online sales), to identify the effect of price competition: The effect of price competition is highly significant. Full broadband access reduces offline electronics retailers' producer rents by 1.5 percent per year from 1999 to 2007.

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