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The Impact of Retail E-Commerce on Relative Prices and Consumer Welfare

Author

Listed:
  • Yoon Jo

    (Texas A&M University)

  • Misaki Matsumura

    (Deloitte Tax LLP)

  • David E. Weinstein

    (Columbia University and NBER)

Abstract

This paper examines the impact of retail e-commerce on pricing behavior and welfare. Using Japanese data, we find that e-commerce lowered relative inflation rates for goods sold intensively online. We use long time series and historical catalog sales as an instrument for e-commerce sales intensity. The entry of e-commerce firms raised the rate of intercity price convergence in physical stores for goods sold intensively online, but not for other goods, which suggests e-commerce enhances price arbitrage. We estimate that e-commerce lowered variety-adjusted prices on average by 0.9% between 1996 and 2014, and more in cities with highly educated populations.

Suggested Citation

  • Yoon Jo & Misaki Matsumura & David E. Weinstein, 2024. "The Impact of Retail E-Commerce on Relative Prices and Consumer Welfare," The Review of Economics and Statistics, MIT Press, vol. 106(6), pages 1675-1689, November.
    • Handle: RePEc:tpr:restat:v:106:y:2024:i:6:p:1675-1689
    DOI: 10.1162/rest_a_01272
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