Competition in B2C eCommerce: Analytical Issues and Empirical Evidence

This paper questions the widely held view that B2C eCommerce markets are characterised by a high intensity of competition, using a mixture of theoretical arguments and empirical evidence. We discuss two hypothesis and survey empirical studies which test them. We argue that the goods sold in B2C eCommerce have to be interpreted as heterogeneous “composite goods”, that market transparency in B2C eCommerce is lower than widely assumed, and that high endogenous sunk costs limit the intensity of competition in B2C eCommerce.