Internet Retail Demand: Taxes, Geography, and Online-Offline Competition

Glenn Ellison () and Sara Fisher Ellison

No 12242, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Data on sales of memory modules are used to explore several aspects of e-retail demand. There is a strong relationship between e-retail sales to a given state and sales tax rates that apply to purchases from online retailers. This suggests that there is substantial substitution between online and online retail, and tax avoidance may be an important contributor to e-retail activity. Geography matters in two ways: we find some evidence that consumers prefer purchasing from firms in nearby states to benefit from faster shipping times as well as evidence of a separate preference for buying from in-state firms. Consumers appear fairly rational in some ways, but boundedly rational in others.

JEL-codes: L8 D1 H2 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-com, nep-geo, nep-ict, nep-mkt, nep-pbe and nep-ure
Date: 2006-05
Note: IO PE
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