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Consumer benefits from the EU Digital Single Market: evidence from household appliances markets

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Abstract

This paper investigates price differences between online and offline retail channels in the EU Digital Single Market. Using price and sales data for ten different product categories sold both offline and online in 21 EU countries in 2009, and correcting for product characteristics, we find evidence that confirms the theory: online prices are lower than offline prices, price dispersion also tends to be lower online and online demand is more price-elastic than offline demand. In addition, from our demand estimates we compute the consumers' welfare effects of different scenarios. Our results indicate that a full price convergence across EU member states towards the lowest observed average price would significantly benefit consumers. Moreover, eliminating e-commerce would reduce consumer surplus in 34 billion while an increase in online sales between 10% and 25% would represent a change in consumer welfare in the range of 3.4 billion to 13 billion.

Suggested Citation

  • Nestor Duch-Brown & Bertin Martens, 2014. "Consumer benefits from the EU Digital Single Market: evidence from household appliances markets," JRC Working Papers on Digital Economy 2014-03, Joint Research Centre.
    • Handle: RePEc:ipt:decwpa:2014-03
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    File URL: https://joint-research-centre.ec.europa.eu/reports-and-technical-documentation/consumer-benefits-eu-digital-single-market-evidence-household-appliances-markets_en
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    Citations

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    Cited by:

    1. Néstor Duch-Brown & Lukasz Grzybowski & André Romahn & Frank Verboven, 2023. "Evaluating the Impact of Online Market Integration—Evidence from the EU Portable PC Market," American Economic Journal: Microeconomics, American Economic Association, vol. 15(4), pages 268-305, November.
    2. Yu Wang (Avery. W) & Yi Wang & Soo Hee Lee, 2017. "The Effect of Cross-Border E-Commerce on China’s International Trade: An Empirical Study Based on Transaction Cost Analysis," Sustainability, MDPI, vol. 9(11), pages 1-13, November.
    3. Doris Ritzberger-Grünwald & Fabio Rumler, 2019. "Challenges for measuring inflation in a digital world from a monetary policy perspective," Monetary Policy & the Economy, Oesterreichische Nationalbank (Austrian Central Bank), issue Q3/19, pages 42-53.
    4. Melisande Cardona & Nestor Duch-Brown, 2016. "Delivery Costs and Cross-border e-Commerce in the EU Digital Single Market," JRC Working Papers on Digital Economy 2016-03, Joint Research Centre.
    5. Bonnet, Céline & Etcheverry, Clara, 2021. "The Impact of Online Grocery Shopping on Retail Competition and Profit Sharing: an Empirical Evidence of the French Soft Drink Market," TSE Working Papers 21-1225, Toulouse School of Economics (TSE), revised Jan 2022.
    6. Duch-Brown, Néstor & Grzybowski, Lukasz & Romahn, André & Verboven, Frank, 2017. "The impact of online sales on consumers and firms. Evidence from consumer electronics," International Journal of Industrial Organization, Elsevier, vol. 52(C), pages 30-62.

    More about this item

    Keywords

    price dispersion; e-commerce; consumer welfare;
    All these keywords.

    JEL classification:

    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L15 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Information and Product Quality
    • L68 - Industrial Organization - - Industry Studies: Manufacturing - - - Appliances; Furniture; Other Consumer Durables

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