Price setting in online markets: Basic facts, international comparisons, and cross-border integration

Oleksandr Talavera () and Yuriy Gorodnichenko

VfS Annual Conference 2015 (Muenster): Economic Development - Theory and Policy from Verein für Socialpolitik / German Economic Association

Abstract: We document basic facts about prices in online markets in the U.S. and Canada, a rapidly growing segment of the retail sector. Relative to prices in regular stores, prices in online markets are more flexible as well as exhibit stronger pass-through (60-75 percent) and faster convergence (half-life less than 2 months) in response to movements of the nominal exchange rate. Multiple margins of adjustment (frequency of price changes, direction of price changes, size of price changes, exit of sellers) are active in the process of responding to nominal exchange rate shocks. Furthermore, we use the richness of our dataset to show that degree of competition, stickiness of prices, synchronization of price changes, reputation of sellers, and returns to search effort are important determinants of pass-through and speed of price adjustment for international price differentials.

JEL-codes: E31 F40 F41 (search for similar items in EconPapers)
Date: 2015
New Economics Papers: this item is included in nep-ind, nep-mac, nep-mkt and nep-opm
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Citations: View citations in EconPapers (14)

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Related works:
Journal Article: Price Setting in Online Markets: Basic Facts, International Comparisons, and Cross-Border Integration (2017)
Working Paper: Price Setting in Online Markets: Basic Facts, International Comparisons, and Cross-border Integration (2014)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:vfsc15:112885

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