The Review of Economics and Statistics Vol. 106 No. 6 2024
The Impact of Retail E-Commerce on Relative Prices and Consumer Welfare
Abstract
This paper examines the impact of retail e-commerce on pricing behavior and welfare. Using Japanese data, we find that e-commerce lowered relative inflation rates for goods sold intensively online. We use long time series and historical catalog sales as an instrument for e-commerce sales intensity. The entry of e-commerce firms raised the rate of intercity price convergence in physical stores for goods sold intensively online, but not for other goods, which suggests e-commerce enhances price arbitrage. We estimate that e-commerce lowered variety-adjusted prices on average by 0.9% between 1996 and 2014, and more in cities with highly educated populations.
- DOI
- 10.1162/rest_a_01272
- Volume
- 106
- Issue
- 6
- Pages
- 1675-1689
- Language
- en
- Sources
- openalex bibtex:phds-export.bib crossref