Question

Recently, Walmart introduced their new subscription shopping service – Walmart +.  This new service is designed to directly complete with the well-established subscription shopping service offered by Amazon – Amazon Prime.  Both services offer a wide variety of products at competitive prices with free shipping.  Given your vast knowledge of economics, how have these (or will they in the future) change

1. a. The elasticities of demand for many of the products found for sale online via these services.
2. b. The ability of the producers to control the pricing of those same products.
3. c. The ability of consumers to make purchase decisions.

Answer 1

a) As more and more competitors are entering the market for online online sale of goods in the market, this will reduce the elasticity and make the goods more elastic in the long run as there will be more substitute for the goods in the market.

b) AS more and more substitues for these services increases the ability of the sellers in the market to control the price will diminish and they will become price takers.

c) More and more people selling goods online means that consumer can make a choice from variety of available goods, this will increase the ability to make purchase decision.