E-commerce and price setting: evidence from Europe

Georg Strasser, Elisabeth Wieland, Paweł Macias, Aneta Błażejowska, Karol Szafranek, David Wittekopf, Jörn Franke, Lukas Henkel and Chiara Osbat

No 320, Occasional Paper Series from European Central Bank

Abstract: E-commerce has become more prevalent throughout Europe in the last decade. The coronavirus (COVID-19) pandemic accelerated this trend, particularly in the retail sector. This paper focuses on the implications of increasing business-to-consumer e-commerce for prices and inflation in the euro area. It highlights three key results. First, whether online prices and inflation are higher or lower than their offline counterparts depends on the distribution model, the sector and the country. Moreover, properly selected online prices track official inflation indices even in real time. Second, the effect of e-commerce on inflation appears to be transient and differs between countries. However, as the penetration of some markets is still low, these transitory effects will likely persist at the euro area level for several years. Third, online prices change more frequently than offline prices. This might lead to greater price flexibility overall as online trade gains market share in a growing number of sectors. JEL Classification: D4, E31, L11

Keywords: consumer prices; e-commerce; inflation; microdata; price rigidity (search for similar items in EconPapers)
Date: 2023-07
New Economics Papers: this item is included in nep-eec, nep-ind and nep-mon
Note: 1137785
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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