How Rigid Are Prices in E-Commerce? An Analysis of Daily Price Change Activity in Internet Retailing

We explore daily patterns of Internet pricing for the two major Internet retailers, Amazon.com and BarnesandNoble.com, using data on 377 books collected over a 449-day period in 2003-2004. We frame this investigation in terms of a key question: How rigid are prices on the Internet? Internet retailers, in contrast with traditional firms, adjust prices any day of the week throughout the year; firms´ price adjustments for books occur less frequently than daily-every 90 days on average; price change activity varies by book category, from a high of one change on average every 61 days for best-sellers to a low of one change every 184 days on average for steadysellers; and, Amazon changes prices less frequently than BN. The former changes book prices every 222 days and the latter every 56 days on average.