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Did the Euro Foster Online Price Competition? Evidence from an International Price Comparison Site

Michael Baye, J. Rupert J. Gatti, Paul Kattuman and John Morgan
Additional contact information
J. Rupert J. Gatti: University of Cambridge
Paul Kattuman: University of Cambridge

No 2005-09, Working Papers from Indiana University, Kelley School of Business, Department of Business Economics and Public Policy

Abstract: We study the impact of the Euro on prices charged by online retailers within the EU. Our data spans the period before and after the Euro was introduced, covers a variety of products, and includes countries inside and outside of the Eurozone. After controlling for cost, demand, and market structure effects, we show that the pure Euro changeover effect is to raise average prices in the Eurozone by 3% and average minimum prices by 7%. Finally, we develop a model of online pricing in the context of currency unions, and show that these price patterns are broadly consistent with clearinghouse models.

Keywords: Price competition; internet (search for similar items in EconPapers)
JEL-codes: D40 D83 F15 L13 M37 (search for similar items in EconPapers)
Date: 2005
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Published in Economic Inquiry, 2006

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