| Abstract: |
This paper studies the behaviour of Internet prices. It compares price
rigidities on the Internet and in traditional brick-and-mortar stores and
provides a cross-country perspective. The data set covers a broad range of
items typically sold over the Internet.It includes more than 5 million daily
price quotes downloaded from price comparison web sites in France, Germany,
Italy, the UK and the US. The following results emerge from our analysis.
First, and contrary to the recent findings for common CPI data, Internet
prices in the EU countries do not change less often than online prices in the
US. Second, prices on the Internet are not necessarily more flexible than
prices in traditional brick-and-mortar stores. Third, there is substantial
heterogeneity in the frequency of price change across shop types and product
categories. Fourth, the average price change on the Internet is relatively
large, but smaller than the respective values reported for CPI data. Finally,
panel logit estimates suggest that the likelihood of observing a price change
is a function of both state- and time-dependent factors. JEL Classification:
E31; L11. |