Establishing a Framework For Analyzing Market Power in Electronic Commerce: An Empirical Study

This research aims to develop some suitable metrics for the measurement of market power in the online retailing business. While it is obvious that market power exists in the online retailing business, especially among the market leaders, the factors that drive that market power have been considerably less analyzed. One of the main reasons why existing research in this area has concentrated on case studies and generalized observations is the lack of data that has been traditionally used to measure market power. On the other hand, the electronic nature of an online transaction makes available “new” clickstream data, in the form of individual and aggregate web statistics. We explain a strategic conduct of an online retailer in terms of its manifestation in the clickstream data. In the process, we develop a framework for measuring market power as applicable to the world of online retailing.