Working Paper: NBER ID: w22142
Authors: Alberto F. Cavallo
Abstract: Online prices are increasingly being used for a variety of inflation measurement and research applications, yet little is know about their relation to prices collected offline, where most retail transactions take place. This paper presents the results of the first large-scale comparison of online and offline prices simultaneously collected from the websites and physical stores of 56 large multi-channel retailers in 10 countries. I find that price levels are identical about 72% of the time for the products sold in both locations, with significant heterogeneity across countries, sectors, and retailers. The similarity is highest in electronics and clothing and lowest in drugstores and office-supply retailers. There is no evidence of online prices varying with the location of the ip address or persistent browsing habits. Price changes are not synchronized but have similar frequencies and average sizes. These results have implications for National Statistical Offices and researchers using online data, as well as those interested in the effect of the Internet on retail prices.
Keywords: Online Prices; Offline Prices; Retail Pricing; Consumer Price Indices
JEL Codes: E31; F4; L1
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| online price levels identical (D41) | offline price levels identical (P22) |
| online price changes frequency similar (E30) | offline price changes frequency similar (E30) |
| location of IP address influences online prices (F61) | no influence on online prices (D49) |
| browsing habits influence online prices (D16) | no influence on online prices (D49) |