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Smartphone Diffusion and Consumer Price Comparison Shopping Behavior: Implications for the Marketplace Fairness Act

Author

Listed:
  • Ishuan Li

    (Minnesota State University Mankato)

  • Robert Simonson

    (Minnesota State University Mankato)

  • Guncha Babajanova

    (Cambria Inc.)

  • Matthew Tuomala

    (Reeher LLC)

Abstract

Taxation of e-commerce sales is a contested issue with a potentially large impact on sales tax revenue collected by local and state governments. The stakes are high: the e-commerce share of total retail sales revenues has increased by about 16% each year since 2004, compared to 2.3% for total non-e-commerce sales revenues. Over this period, consumers not only enjoyed falling cellphone prices but also improved technology (smartphones) that allowed them to comparison shop almost instantaneously across state and national borders. We examine the impact of Nexus and effective online sales taxes on smartphone-assisted online purchases. We estimate that smartphone consumers are 6% more likely to comparison shop and 74% less likely to purchase from an online retailer if they live in a state with a Nexus sales tax. The implied tax elasticity of online purchases (6.8) is significantly higher than comparable recent estimates. These results suggest that local and state government forecasts of online sales tax revenue under the Marketplace Fairness Act legislation may be lower than previous estimates.

Suggested Citation

  • Ishuan Li & Robert Simonson & Guncha Babajanova & Matthew Tuomala, 2016. "Smartphone Diffusion and Consumer Price Comparison Shopping Behavior: Implications for the Marketplace Fairness Act," Economics Bulletin, AccessEcon, vol. 36(3), pages 1337-1353.
    • Handle: RePEc:ebl:ecbull:eb-15-00707
    as

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    References listed on IDEAS

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    More about this item

    Keywords

    Internet; e-commerce; taxation; smartphones; Nexus sales tax; Marketplace Fairness Act;
    All these keywords.

    JEL classification:

    • L8 - Industrial Organization - - Industry Studies: Services
    • H2 - Public Economics - - Taxation, Subsidies, and Revenue

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