Sales Taxes and Internet Commerce

Liran Einav, Dan Knoepfle, Jonathan Levin and Neel Sundaresan

American Economic Review, 2014, vol. 104, issue 1, 1-26

Abstract: We estimate the sensitivity of Internet retail purchasing to sales taxes using eBay data. Our first approach exploits the fact that a seller's location?and therefore the applicable tax rate?is revealed only after a buyer has expressed interest in an item. We document how adverse tax "surprises" reduce the likelihood of purchase and shift subsequent purchases toward out-of-state sellers. We then use more aggregated data to estimate that every one percentage point increase in a state's sales tax increases online purchases by state residents by almost 2 percent, while decreasing their online purchases from state retailers by 3?4 percent.

JEL-codes: H71 L81 L86 (search for similar items in EconPapers)
Date: 2014
Note: DOI: 10.1257/aer.104.1.1
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (34)

Downloads: (external link)
http://www.aeaweb.org/articles.php?doi=10.1257/aer.104.1.1 (application/pdf)
http://www.aeaweb.org/aer/data/jan2014/20120752_app.pdf (application/pdf)
http://www.aeaweb.org/aer/data/jan2014/20120752_data.zip (application/zip)
http://www.aeaweb.org/aer/ds/jan2014/20120752_ds.zip (application/zip)
Access to full text is restricted to AEA members and institutional subscribers.

Related works:
Working Paper: Sales Taxes and Internet Commerce (2012)
Working Paper: Sales Taxes and Internet Commerce (2012)
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:aea:aecrev:v:104:y:2014:i:1:p:1-26

Ordering information: This journal article can be ordered from
https://www.aeaweb.org/journals/subscriptions

Access Statistics for this article

American Economic Review is currently edited by Esther Duflo

More articles in American Economic Review from American Economic Association Contact information at EDIRC.
Bibliographic data for series maintained by Michael P. Albert ().