Antitrust & Competition Policy Blog

Editor: D. Daniel Sokol
University of Florida
Levin College of Law

Friday, July 24, 2020

The Impact of E-Commerce on Relative Prices and Consumer Welfare

The Impact of E-Commerce on Relative Prices and Consumer Welfare

By:

Yoon J. Jo; Misaki Matsumura; David E. Weinstein

Abstract:

This paper examines the impact of e-commerce on pricing behavior and welfare. Using Japanese data, we find that the entry of e-commerce firms significantly raised the rate of intercity price convergence for goods sold intensively online, but not for other goods. E-commerce also lowered relative inflation rates for goods sold intensively online. We overcome data challenges using long data series and historical catalog sales as an instrument for e-commerce sales intensity. We estimate that reductions in price dispersion raised welfare by 0.3 percent. E-commerce also lowered variety-adjusted prices on average by 0.9 percent, and more in cities with highly educated populations.

URL:

http://d.repec.org/n?u=RePEc:nbr:nberwo:26506&r=com

https://lawprofessors.typepad.com/antitrustprof_blog/2020/07/the-impact-of-e-commerce-on-relative-prices-and-consumer-welfare.html

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