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

Ishuan Li (), Robert Simonson (), Guncha Babajanova () and Matthew Tuomala ()
Additional contact information
Ishuan Li: Minnesota State University Mankato
Robert Simonson: Minnesota State University Mankato
Guncha Babajanova: Cambria Inc.
Matthew Tuomala: Reeher LLC

Economics Bulletin, 2016, vol. 36, issue 3, 1337-1353

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.

Keywords: Internet; e-commerce; taxation; smartphones; Nexus sales tax; Marketplace Fairness Act (search for similar items in EconPapers)
JEL-codes: H2 L8 (search for similar items in EconPapers)
Date: 2016-07-08
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://www.accessecon.com/Pubs/EB/2016/Volume36/EB-16-V36-I3-P132.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ebl:ecbull:eb-15-00707

Access Statistics for this article

More articles in Economics Bulletin from AccessEcon
Bibliographic data for series maintained by John P. Conley ().