Publications

2012
Lin M, Lucas H, Bailey J. Social Science Research Network Working Paper Series [Internet]. 2012. Publisher's VersionAbstract
Internet banking represents an important innovation in the banking industry, yet empirical analyses of how it affects bank performance remain rare. Using a comprehensive dataset of U.S. banks between 2003 and 2008, we combine propensity-score matching and difference-in-differences methods to study how the adoption of Internet banking affects bank performance. Contrary to common wisdom and several previous studies, we find only modest evidence that Internet banking adoption improves bank performance. In fact, the adoption of Internet banking actually results in worse performance for many banks. Additional analyses suggest that younger banks and banks that are earlier adopters are more likely to enjoy the benefits of Internet banking.
2008
Bailey J, Gao G, Jank W, Lin M, Lucas H, Viswanathan S. Social Science Research Network Working Paper Series [Internet]. 2008. Publisher's VersionAbstract
Sales by small volume sellers are systematically undercounted in public and private surveys of ecommerce. The twin results are that the contribution of small sellers to the ecommerce marketplace is considerably larger than generally assumed and the overall market is larger by this difference. As the costs of selling things online have fallen with cheaper equipment and communications fees, and with the availability of retail platform services provided by eBay, Amazon.com, Google, and many other firms, Internet retailing has grown to include many small businesses and individual occasional sellers, particularly in the United States. But how much do these "small sellers" sell each year? U.S. Government statistics give some insight into the type and sales volume of online sellers, but the Government's current methods of data collection and analysis are better suited to tracking larger, traditionally organized businesses, rather than "small sellers," whether operating as small businesses or as individuals. Traditionally, small sellers simply were ignored. In traditional retail markets, the number of businesses with low annual revenues may not be significant because the contribution of such small sellers to the overall size of the market is relatively small. However, in Internet retailing, there are millions of small sellers that, in the aggregate, make a large contribution to the overall market. Yet these small sellers are systematically overlooked in government and private data collection and analysis. In this paper, we estimate the size of Internet retailing in 2004 to have been over 20% above U.S. Government estimates - and the difference is explained by a more accurate accounting of sales by small sellers. We do this through a variety of methods and the development of confidence intervals in our data. We hope that the techniques outlined in this paper will give greater insight into the magnitude of Internet retailing, particularly in the "long tail" of the ecommerce market occupied by small volume sellers.
2006
Bailey J, Rabinovich E. Social Science Research Network Working Paper Series [Internet]. 2006. Publisher's VersionAbstract
The emergence of the Internet may have fundamentally altered the mechanisms underlying information exchanges between sellers and end consumers. However, little attention has been given to the impact these mechanisms have on the efficiency of supply chain operations. This paper begins to address this deficiency in the literature by evaluating supply chain transaction efficiency effects from Internet purchases by consumers. It develops and empirically tests a theoretical framework examining the role Internet purchases have in establishing transaction-efficiency levels in product exchanges involving sellers, placed at different supply chain echelons, and consumers. The theoretical framework integrates the Transaction-Cost and Internet Economics, Inter-Organizational Information Systems, and Supply Chain Management literatures. Empirical testing, via structural equation modeling, is based on archival data in the Internet music-CD market. The results show that Internet-mediated purchases by consumers allow for greater transaction efficiencies when inventory ownership is postponed further upstream in the supply chain and supply chain echelons are disintermediated. The results also indicate that channel structure configuration, defined by the supply chains' Internet retailing echelon, moderates these transaction efficiency effects.
Bailey J, Rabinovich E. Social Science Research Network Working Paper Series [Internet]. 2006. Publisher's VersionAbstract
Unlike traditional retailers, which use inventory speculation for all their merchandise, Internet book retailers selectively use inventory postponement for specific merchandise items to lower their inventory costs. We develop and test hypotheses that describe merchandise determinants of inventory postponement and speculation at two oligopolistic retailers: Amazon.com and Barnesandnoble.com. We find that merchandise popularity raises both firms' likelihood of inventory speculation. Furthermore, merchandise vintage affects negatively both firms' likelihood of inventory speculation. Merchandise price affects negatively the likelihood of inventory speculation for Amazon.com and positively for Barnesandnoble.com. This may be due to conditions within Barnesandnoble.com, which operates physical and Internet channels.
Bailey J, Rabinovich E. Social Science Research Network Working Paper Series [Internet]. 2006. Publisher's VersionAbstract
Internet retailing models support supply chains where consumer order locations are decoupled from inventory locations. In this setting, retailers dynamically consider inventory location speculation and postponement to fulfill their orders. Particularly, retailers can manage inventory to fulfill orders through two opposing strategies: in-stock inventory and drop-shipping. This paper extends the supply chain management literature by modeling Internet retailers' decisions to balance their offerings between these two strategies. The results show how retailers depend more on both of these strategies as their market share and product popularity increase. Thus, both inventory management strategies may be considered simultaneously to better manage Internet retailers' inventory.
Rabinovich E, Bailey J. Social Science Research Network Working Paper Series [Internet]. 2006. Publisher's VersionAbstract
This paper develops a theoretical framework and empirically investigates physical distribution service (PDS) quality by Internet retailers in their transactions with consumers. An analysis of data that measure hundreds of electronic commerce transactions along with data at the firm level shows that higher shipping and handling charges are good indicators of better PDS quality. Other transaction-level conditions and firm-level attributes also affect PDS quality, as measured by availability, timeliness, and reliability. Most notably, when the net price of products transacted increases, PDS reliability and availability decline. Furthermore, Internet-retailer size is found to favor PDS availability whereas, surprisingly, newer Internet retailers exhibit a higher level of PDS availability than many of their incumbent competitors.
2001
Smith M, Bailey J, Brynjolfsson E. Social Science Research Network Working Paper Series [Internet]. 2001. Publisher's VersionAbstract
As the Internet develops into a robust channel for commerce, it will be important to understand the characteristics of electronic markets. Businesses, consumers, government regulators, and academic researchers face a variety of questions when analyzing these nascent markets. Will electronic markets have less friction than comparable conventional markets? What factors lead to dispersion in Internet prices? What are the major electronic commerce developments to watch in the coming years? This paper addresses these questions by reviewing current academic research, discussing the implications of this research, and proposing areas for future study. We review evidence that Internet markets are more efficient than conventional markets with respect to price levels, menu costs, and price elasticity. However, several studies find substantial and persistent dispersion in prices on the Internet. This price dispersion may be explained, in part, by heterogeneity in retailer-specific factors such as trust and awareness. In addition, we note that Internet markets are still in an early stage of development and may change dramatically in the coming years with the development of cross-channel sales strategies, infomediaries and shopbots, improved supply chain management, and new information markets.