A longitudinal study on Australian online DVD pricing

Abstract

PurposeThe purpose of this paper is to analyze the online DVD market in Australia, which has not been researched so far, and to examine whether the pricing patterns in this market exhibit any regularity consistent or inconsistent with research findings in other markets.Design/methodology/approachA longitudinal data set of 27,030 price observations were collected weekly over one year. Various statistical tests – in particular, a least‐squares dummy variable (LSDV) panel data model with serial correlation – were applied to the data.FindingsIn general, the online branches of multi‐channel retailers have higher average prices and standard deviations than pure internet retailers. Overall, market prices decrease over time significantly within the sample period – about 17.4 per cent decrease for all titles, however, with popular titles' prices decreasing faster than those of random titles. Furthermore, prices do not seem to converge between the two types of online retailers. For individual retailers, brand name effect seems to matter in the results, with a significant difference on prices.Research limitations/implicationsThis is an empirical study on a specific market. More data, testing and comparison are needed for any generalization of the findings whether they are consistent in the global sense.Practical implicationsOnline marketers of different types of retailers may need to reflect on their pricing policies whether their pricing strategies have any space for improvement on profitability.Originality/valueThis study investigates the price movement of the Australian online DVD market using data collected over a one year time span.