Working Paper: CEPR ID: DP15031
Authors: Frank Verboven; Nestor Duchbrown; Andr Romahn; Lukasz Grzybowski
Abstract: Did the Internet make international markets more integrated? To address this question, we study long-term international price differences and their speed of convergence, based on a unique data base for identical goods sold in both online and traditional ``brick-and-mortar'' distribution channels, covering ten European countries. We find that long-term international price differences are closely comparable between both distribution channels. Furthermore, international price differences converge only slightly faster online than offline, and the differences in the international price differences between online and offline converge at a very fast rate. Finally, regardless of the distribution channel, long-term price differences are lower and converge faster within the same currency union. Our findings imply that online markets are currently not more integrated than traditional markets.
Keywords: international price differences; international price convergence; difference-in-difference convergence; market integration; e-commerce
JEL Codes: L13; L68; L86
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| long-term international price differences (F16) | similar pricing behaviors (L11) |
| speed of convergence of international price differences (online) (F16) | speed of convergence of international price differences (offline) (F16) |
| differences in international price differences (online) (F29) | differences in international price differences (offline) (F29) |
| countries within the same currency union (F36) | lower long-term price differences (F16) |
| countries within the same currency union (F36) | faster convergence rates (C45) |