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Price Setting in Online Markets: Basic Facts, International Comparisons, and Cross-Border Integration / Sasha, Talavera

American Economic Review, Volume: 107, Issue: 1, Pages: 249 - 282

Swansea University Author: Sasha, Talavera

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DOI (Published version): 10.1257/aer.20141127

Abstract

We document basic facts about prices in online markets in the United States and Canada, which is a rapidly growing segment of the retail sector. Relative to prices in regular stores, prices in online markets are more flexible and exhibit stronger pass-through (60-75 percent) and faster convergence (...

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Published in: American Economic Review
ISSN: 0002-8282
Published: American Economic Association 2017
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URI: https://cronfa.swan.ac.uk/Record/cronfa31861
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Abstract: We document basic facts about prices in online markets in the United States and Canada, which is a rapidly growing segment of the retail sector. Relative to prices in regular stores, prices in online markets are more flexible and exhibit stronger pass-through (60-75 percent) and faster convergence (half-life less than two months) in response to movements of the nominal exchange rate. Multiple margins of adjustment are active in the process of responding to nominal exchange rate shocks. Properties of goods, sellers, and markets are systematically related to pass-through and the speed of price adjustment for international price differentials.
College: School of Management
Issue: 1
Start Page: 249
End Page: 282