Working Paper: NBER ID: w26506
Authors: 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.
Keywords: ecommerce; pricing behavior; consumer welfare; Japan
JEL Codes: F14; L86; R32
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| entry of ecommerce firms (L81) | rate of intercity price convergence for goods sold intensively online (L81) |
| entry of ecommerce firms (L81) | relative inflation rates for goods sold intensively online (L81) |
| reductions in price dispersion due to ecommerce (L81) | welfare increase (I38) |
| ecommerce (L81) | variety-adjusted prices (P22) |
| ecommerce (L81) | pricing behavior changes (D49) |