IDEAS home Printed from https://ideas.repec.org/a/kap/revind/v66y2025i3d10.1007_s11151-024-09987-5.html
   My bibliography  Save this article

Online Market Resilience to Economic Shocks: Evidence Based on Price Dispersion from the COVID-19 Outbreak in China

Author

Listed:
  • Taoxiong Liu

    (Tsinghua University)

  • Huolan Cheng

    (Tsinghua University)

  • Jianping Liu

    (Zhong Ou AMC)

  • Zhen Sun

    (Tsinghua University)

Abstract

We examine the effect of COVID-19 epidemic and the subsequent stay-at-home order on market efficiency in China’s online markets. Through a comparison of price dispersion changes across online retail platforms around the lockdown date with the corresponding period in the 2019 lunar year—with the use of a unique and extensive online retail price dataset—we find a counterintuitive decrease in product price dispersion during the epidemic, which is contrary to conventional economic expectations during adverse events. Our study differentiates products by crisis-time demand elasticity—e.g., food versus clothing—and by online search intensity. This reveals that the lockdown and prolonged stay-at-home period facilitated online searches by consumers, which reduced information costs and enhanced market efficiency. The pandemic-induced decrease in price dispersion can be largely attributed to heightened online search activity: after we adjust for the intensity of search, the remaining pandemic effect on price dispersion becomes positive. China’s resilient online market acted as a protective buffer during the COVID-19 crisis. The transition from offline to online markets and increased search activities bolstered online market functionality and mitigated the epidemic’s repercussions.

Suggested Citation

  • Taoxiong Liu & Huolan Cheng & Jianping Liu & Zhen Sun, 2025. "Online Market Resilience to Economic Shocks: Evidence Based on Price Dispersion from the COVID-19 Outbreak in China," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 66(3), pages 397-413, March.
    • Handle: RePEc:kap:revind:v:66:y:2025:i:3:d:10.1007_s11151-024-09987-5
    DOI: 10.1007/s11151-024-09987-5
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1007/s11151-024-09987-5
    File Function: Abstract
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1007/s11151-024-09987-5?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    More about this item

    Keywords

    COVID-19; Pandemic; Price dispersion; Market efficiency; Online market;
    All these keywords.

    JEL classification:

    • L16 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Industrial Organization and Macroeconomics; Macroeconomic Industrial Structure
    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:kap:revind:v:66:y:2025:i:3:d:10.1007_s11151-024-09987-5. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.