The impact of sales tax on internet and catalog sales: Evidence from a natural experiment

Yu Jeffrey Hu and Zhulei Tang

International Journal of Industrial Organization, 2014, vol. 32, issue C, 84-90

Abstract: This paper studies the effect of sales tax changes on internet and catalog sales. We collect sales data from a retailer that sells its products through its internet and catalog channels. We analyze the retailer's sales before and after a major tax cut in one of the largest metropolitan areas in the U.S. This natural experiment allows us to separate the effect of the tax cut from the effect of other confounding factors. The results from our panel data analyses indicate that remote sales have decreased by about 15% in response to a four percentage point decrease in sales tax. Our results are statistically significant and highly robust. Interestingly, we also find that the effect of the tax cut varies across different types of consumers, products, and channels. These findings have important managerial and public policy implications.

Keywords: Electronic commerce; Internet sales; Sales tax; Price elasticity (search for similar items in EconPapers)
JEL-codes: H71 K34 (search for similar items in EconPapers)
Date: 2014
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0167718713001252
Full text for ScienceDirect subscribers only

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:eee:indorg:v:32:y:2014:i:c:p:84-90

DOI: 10.1016/j.ijindorg.2013.11.003

Access Statistics for this article

International Journal of Industrial Organization is currently edited by P. Bajari, B. Caillaud and N. Gandal

More articles in International Journal of Industrial Organization from Elsevier
Bibliographic data for series maintained by Catherine Liu ().