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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 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.
Posted by Tyler Cowen on June 9, 2007 at 09:33 AM in Data Source | Permalink
Comments
Then Napster must have "enhanced consumer welfare" by at least $10 billion...
Posted by: Paul N at Jun 9, 2007 11:26:33 AM
Yes, there has been a great stream of new products and technologies since 1980. But there was also a great stream of new products and technologies in the earlier eras. My Great-grandparents lived from the 1870s to the 1960s in a rural county of Kentucky. When they were born they had no electricity, running water or modern communications and probably never saw a doctor in their childhood. Yet, before they died they had central heat and air conditioning, the telephone -- a party line -- the auto, penicillin and we were on the verge of putting a man on the moon. I suspect they saw a greater improvement in their standard of living of any generation before or since.
My point is that I have no idea if their was a break in trend in the supply of new innovations and technologies some 25 years ago. All these listing of new products is great, but it is besides the point. The relevent question should be, was there a break in the trend of new innovations about a quarter of a century ago? Are we actually experiencing more new innovations and new products then my Great-grandparents did?
I have no idea. But I have seen no one try to seriously address the question in this manner -- and simply listing new products is irrelevent.
Posted by: spencer at Jun 9, 2007 4:00:57 PM
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.
Posted by: tom s. at Jun 9, 2007 5:22:27 PM
"how much the Internet is worth" includes an example of what decreases the value of the internet: all but one of the links and trackbacks are spam. It is amazing that the internet still works when there is so much active effort to distort or destroy every search and e-mail system.
Posted by: Zubon at Jun 11, 2007 8:21:30 AM
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
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