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

Yoon Jo · Misaki Matsumura · David Weinstein

50 citations0/0 files storedNational Bureau of Economic Research

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Consumer Market Behavior and Pricing Global trade and economics Merger and Competition Analysis

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.

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References

2002Technology, Geography, and Trade 2012New Trade Models, Same Old Gains?1994New product varieties and the measurement of international prices 2003The effect of the Internet on international trade 2002Does the Internet Make Markets More Competitive? Evidence from the Life Insurance Industry 2010Information from Markets Near and Far: Mobile Phones and Agricultural Markets in Niger 1996Convergence to the Law of One Price Without Trade Barriers or Currency Fluctuations 2010Information, Direct Access to Farmers, and Rural Market Performance in Central India

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