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Erik Brynjolfsson • Yu (Jeffrey) Hu • Michael D. Smith
Sloan School of Management, Massachusetts Institute of Technology, Cambridge, Massachusetts 02139
Sloan School of Management, Massachusetts Institute of Technology, Cambridge, Massachusetts 02139
The Heinz School of Public Policy and Management, Carnegie Mellon University,
Pittsburgh, Pennsylvania 15213
erikb@mit.edu • yuhu@mit.edu • mds@cmu.edu
We present a framework and empirical estimates that quantify the economic impact of
increased product variety made available through electronic markets. While efficiency
gains from increased competition significantly enhance consumer surplus, for instance, by
leading to lower average selling prices, our present research shows 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,......

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Approximate Word Count: 9751
Approximate Pages: 40 (250 words per double-spaced page)

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