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Price settings in online markets: Basic facts, international comparisons, and cross-border integration
Y. Gorodnichenko (UC Berkeley) and O. Talavera (Sheffield)NBER WP 20406
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LAW OF ONE PRICE (LOOP)
โข A very intuitive and simple conceptโข Basic ingredient/assumption in many models in international
economicsโข In the data:
โ Large deviations from LOOPโข Explanations:
โ Frictions (distance, information, tariffs) โ Sticky pricesโ The data are โpoorโ (e.g., compare price indexes)
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LAW OF ONE PRICE (LOOP)
โข A very intuitive and simple conceptโข Basic ingredient/assumption in many models in international economicsโข In the data (country- or region-level):
โ Large/Heterogeneous deviations from LOOPโ Slow (if any) convergence to LOOP
โข Explanations: โ Frictions (distance, information, tariffs) โ Sticky pricesโ The data are โpoorโ (e.g., compare price indexes)
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LAW OF ONE PRICE (LOOP)
โข A very intuitive and simple conceptโข Basic ingredient/assumption in many models in international economicsโข In the data (country- or region-level):
โ Large/Heterogeneous deviations from LOOPโ Slow (if any) convergence to LOOP
โข Explanations: โ Frictions (distance, information, tariffs) โ Sticky pricesโ The data are โpoorโ (e.g., compare price indexes)
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A twist to LOOP: EX Pass-Through
โข Macro dataโ Campa and Goldberg (2005): The United States has among the lowest
pass-through rates in the OECD, at approximately 25% in the short run and 40% over the longer run.
โข Avoiding aggregation bias:โ Imbs et al. (2005), Cruchini and Shintani (2008), Broda and Weinstein
(2008): the pass-through and the speed of price adjustment are higher when individual, narrowly-defined goods are considered
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Determinants of PT and Speed of Adjustment
โข Factors affecting the size of the pass-through. โ Market structure, โ market power (including adjustment of mark-ups), โ tariffs, โ presence of multinationalsโ importance of non-traded inputs for price stickiness of final goods
Menon (1996), Cardasz and Stollery (2001), Gaulier, Lahreche-Revil, and Mejean (2006), Goldberg and Hellerstein (2012), Mayoral and Gardea (forthcoming)
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What do we do?
We use online prices for estimating:โข Descriptive statisticsโข Exchange Rate PT, speed of Adjustmentโข Determinants of PT/SA
Why online prices?
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ONLINE MARKETSโข Highly integrated and fast growing markets, unlike brick and mortar retailersโข Easy search for best pricesโข Price comparison for identical goods is easy across storesโข Negligible physical cost of changing pricesโข Goods sold online are easy to ship and transactions costs are smallโข Geographical location of stores and consumers is largely irrelevantโข Nearly impossible to discriminate consumers based on their locationโข Easy to collect data
We use these unique characteristics to re-examine one of the key puzzles using prices from U.S. and Canadian online sellers.
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ONLINE MARKETS
The IMRG, the UKโs industry association for e-retail, estimated that total e-commerce sales for 2011 were ยฃ77bn (or approximately 10 percent of total retail sales in the UK economy). This represents an increase of 14 percent from 2010 while total retail sales increased by 1.7 percent in 2011. Importantly, not only have online sales risen during the past recession, but they have historically grown much faster. While US, UK and Japan are leaders in business to consumer e-commerce, Chinaโs e-commerce market in particular has risen over 130% in 2011. There is also high growth of online retailing in Europe, with Poland (29%), Ireland (24%), Spain (24%), France (21%) having highest spending online.
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ONLINE MARKETSโข Highly integrated and fast growing marketsโข Easy search for best pricesโข Price comparison for identical goods is easy across storesโข Negligible physical cost of changing pricesโข Goods sold online are easy to ship and transactions costs are smallโข Geographical location of stores and consumers is largely irrelevantโข Nearly impossible to discriminate consumers based on their locationโข Easy to collect data
We use these unique characteristics to re-examine one of the key puzzles using prices from U.S. and Canadian online sellers.
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ONLINE MARKETSโข Highly integrated and fast growing marketsโข Easy search for best pricesโข Price comparison for identical goods is easy across storesโข Negligible physical cost of changing prices, minimal menu costs, flexible pricesโข Goods sold online are easy to ship and transactions costs are smallโข Geographical location of stores and consumers is largely irrelevantโข Nearly impossible to discriminate consumers based on their locationโข Easy to collect data
We use these unique characteristics to re-examine one of the key puzzles using prices from U.S. and Canadian online sellers.
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ONLINE MARKETSโข Highly integrated and fast growing marketsโข Easy search for best pricesโข Price comparison for identical goods is easy across storesโข Negligible physical cost of changing pricesโข Goods sold online are easy to ship and transactions costs are smallโข Geographical location of stores and consumers is largely irrelevantโข Nearly impossible to discriminate consumers based on their locationโข Easy to collect data
We use these unique characteristics to re-examine one of the key puzzles using prices from U.S. and Canadian online sellers.
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ONLINE MARKETSโข Highly integrated and fast growing marketsโข Easy search for best pricesโข Price comparison for identical goods is easy across storesโข Negligible physical cost of changing pricesโข Goods sold online are easy to ship and transactions costs are smallโข Geographical location of stores and consumers is largely irrelevantโข Nearly impossible to discriminate consumers based on their locationโข Easy to collect data
We use these unique characteristics to re-examine one of the key puzzles using prices from U.S. and Canadian online sellers.
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ONLINE MARKETSโข Highly integrated and fast growing marketsโข Easy search for best pricesโข Price comparison for identical goods is easy across storesโข Negligible physical cost of changing pricesโข Goods sold online are easy to ship and transactions costs are smallโข Geographical location of stores and consumers is largely irrelevantโข Nearly impossible to discriminate consumers based on their locationโข Easy to collect data
We use these unique characteristics to re-examine one of the key puzzles using prices from U.S. and Canadian online sellers.
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ONLINE MARKETS
โข Highly integrated and fast growing marketsโข Easy search for best pricesโข Price comparison for identical goods is easy across storesโข Negligible physical cost of changing pricesโข Goods sold online are easy to ship and transactions costs are smallโข Geographical location of stores and consumers is largely irrelevantโข Nearly impossible to discriminate consumers based on their locationโข Easy to collect data
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Research on Online Prices
โข Brynjolfsson and Smith (2000) compare online and conventional stores prices on books and CDs. โ online prices are 9-16% lower than prices in regular storesโ the changes in online prices are much smaller for online prices, โ quotes of internet prices are quite dispersed even for precisely
defined goods.
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Research on Online Prices
โข Lunnemann and Wintr (2011) document stickiness of online prices in the U.S. and large European markets (Germany, France, Italy, and the U.K.). โ internet prices change less often in the U.S. than in Europe (the
opposite is true for conventional stores). โ Online prices are more flexible than their offline counterparts with
half of the spells ending within a month.
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Dispersion in Online Markets
โข Dramatic dispersion of prices in online markets because of โ information frictions โ sellersโ ability to discriminate consumers (e.g., based on what sellers
know about customers), โ differences in advertisement (e.g., investment in building brand,
reputation, etc.).
Baye and Morgan 2001, Baye and Morgan 2004, Morgan, Orzen, and Sefton 2006, Baye and Morgan 2009
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Boivin et al. (2012)
โข Dynamics of online price differences across three book sellers: Amazon.com (and Amazon.ca), BN.com (Barnes & Noble website), and Chapters.ca. โ price differentials (or relative quantities) for books react to
fluctuations in the relative price of foreign competition following exchange rate movement which is consistent with extensive market segmentation and pervasive violations of the law of one price.
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Cavallo et al (2014)
โข Prices for all products sold by Apple, IKEA, H&M, and Zara through their online retail stores in 85 countries. โ the law of one price holds very well within currency unions, but does
not hold outside currency unionsโ good-level real exchange rates reflect differences in prices at the time
products are first introduced
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Contribution to literature
โข We use unique characteristics of online markets to re-examine LOOP using prices from U.S. and Canadian online sellers.
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DATA COLLECTIONโข We use a popular price comparison website.โข Every Saturday at midnight, a Tcl/python script has been triggered to collect webpages with price
information. โข The script extracts
โ good description, โ unique manufacturing product number (MPN), โ prices for each seller, โ sellers' unique ids and reviews.
โข Our price quotes are price before taxes and shipping/handling costs. โข What we have:
โ >140,000 goods โ >14 million good-seller-week-country quotes. โ 55 types of goods in four main categories: computers (20 types, e.g., laptops), electronics (14 types, e.g.,
GPS), software (11 type, e.g., computer games), and cameras (10 types, e.g., digital cameras).
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Sample compositionUSA Canada
1 SeaBoom.com AgileElectronics
2 NextWarehouse.com MostlyDigital
3 Amazon.com B&H PhotoVideo4 TheNerds.net TigerDirect.ca
5 Amazon.com Marketplace OnHop
6 PCConnectionExpress Newegg.ca
7 CompSource Inc. Amazon.ca
8 MacConnection PC-Canada
9 Memory4Less.com DirectDialCanada
10 PROVANTAGE Cendirect.com
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US vs CA
11.1
1.2
1.3
No
min
al E
xcha
ng
e R
ate
, U
SD
/CA
D
15
020
025
030
035
040
0P
rice
Oct Jan Apr Jul Oct Jan Apr Jul Oct2008 2009 2010
WD VelociRaptor 300GB Hard Drive, by seller, US
11.
11.
21.
3N
om
inal
Exc
hang
e R
ate,
US
D/C
AD
200
250
300
350
400
450
Pric
e
Oct Jan Apr Jul Oct Jan Apr Jul Oct2008 2009 2010
WD VelociRaptor 300GB Hard Drive, by seller, CA
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DATA COLLECTIONโข We use a popular price comparison website.โข Every Saturday at midnight, a Tcl/python script has been triggered to collect webpages with price
information. โข The script extracts
โ good description, โ unique manufacturing product number (MPN), โ prices for each seller, โ sellers' unique ids and reviews.
โข Our price quotes are price before taxes and shipping/handling costs. โข What we have:
โ >140,000 goods โ >14 million good-seller-week-country quotes. โ 55 types of goods in four main categories: computers (20 types, e.g., laptops), electronics (14 types, e.g.,
GPS), software (11 type, e.g., computer games), and cameras (10 types, e.g., digital cameras).
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Start of data collection
.91
1.1
1.2
1.3
Ca
na
dia
n D
olla
rs t
o O
ne U
.S.
Do
llar,
Daily
01jan2008 01jan2009 01jan2010 01jan2011 01jan2012
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DESCRIPTIVE STATISTICS
Canada USA Mean St.Dev Mean St.Dev (1) (2) (3) (4) Cross-sectional distribution of prices
St.dev. log(Price) 0.128 0.105 0.151 0.123 IQR log(Price) 0.095 0.097 0.160 0.151 Median log(Price) 5.077 1.488 4.979 1.471
Median duration of price spell (weeks) 2.974 9.615 4.112 9.335 Size of price changes
Median dlog(Price) -0.007 0.030 -0.005 0.031 Median abs(dlog(Price)) 0.041 0.058 0.042 0.048
Synchronization of price changes 0.299 0.213 0.190 0.121 Properties of sellers
Number of sellers 2.399 1.318 3.627 1.983 Stability 0.423 0.213 0.405 0.188
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DESCRIPTIVE STATISTICS
Canada USA Mean St.Dev Mean St.Dev (1) (2) (3) (4) Cross-sectional distribution of prices
St.dev. log(Price) 0.128 0.105 0.151 0.123 IQR log(Price) 0.095 0.097 0.160 0.151 Median log(Price) 5.077 1.488 4.979 1.471
Median duration of price spell (weeks) 2.974 9.615 4.112 9.335 Size of price changes
Median dlog(Price) -0.007 0.030 -0.005 0.031 Median abs(dlog(Price)) 0.041 0.058 0.042 0.048
Synchronization of price changes 0.299 0.213 0.190 0.121 Properties of sellers
Number of sellers 2.399 1.318 3.627 1.983 Stability 0.423 0.213 0.405 0.188
๐๐ฆ๐๐โ๐๐๐๐๐ง๐๐ก๐๐๐๐๐ก๐ = ฯ ๐เต๐๐๐ก๐ ๐ โ ๐๐,๐กโ1,๐ ๐เต๐ โ๐ฎ๐๐ก๐ โ 1ฯ ๐เต๐๐๐ก๐ ๐ โ missing โฉ๐๐,๐กโ1,๐ ๐ โ missingเต๐ โ๐ฎ๐๐ก๐ โ 1
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DESCRIPTIVE STATISTICS
Canada USA Mean St.Dev Mean St.Dev (1) (2) (3) (4) Cross-sectional distribution of prices
St.dev. log(Price) 0.128 0.105 0.151 0.123 IQR log(Price) 0.095 0.097 0.160 0.151 Median log(Price) 5.077 1.488 4.979 1.471
Median duration of price spell (weeks) 2.974 9.615 4.112 9.335 Size of price changes
Median dlog(Price) -0.007 0.030 -0.005 0.031 Median abs(dlog(Price)) 0.041 0.058 0.042 0.048
Synchronization of price changes 0.299 0.213 0.190 0.121 Properties of sellers
Number of sellers 2.399 1.318 3.627 1.983 Stability 0.423 0.213 0.405 0.188
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INTERNATIONAL PRICE COMPARISONS
Mean St.Dev
AR1 OLS
N
(1) (2) (4) (5)
Panel A: Mean prices (net)
Relative exchange rate 0.083 0.236 0.923 1,709,011 Real exchange rate 0.052 0.231 0.917 1,709,011
Panel B: Mean prices (gross)
Relative exchange rate 0.107 0.205 0.929 830,169 Real exchange rate 0.064 0.205 0.928 830,169
Relative exchange rate โก logเตซ๐๐๐ก๐ถ๐ด/๐๐๐ก๐๐เตฏ Real exchange rate โก logเตซ๐ธ๐โ1๐ก ร ๐๐๐ก๐ถ๐ด/๐๐๐ก๐๐เตฏ
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PASS-THROUGH
Pass-through (PT): logเตฌ๐๐๐ก๐ถ๐ด๐๐๐ก๐๐เตฐ= ๐ผ๐ธ๐๐ก + ๐ถ๐๐๐ก๐๐๐๐ + ๐๐๐๐๐๐๐ก, (1)
The long-run pass-through and is similar to specifications estimated in Goldberg and Knetter (1997), Campa and Goldberg (2005), Goldberg and Hellerstein (2012).
The law of one price predicts that ๐ผ should be equal to one and larger values of ๐ผ correspond to smaller departures from the law of one prices.
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SPEED OF PRICE ADJUSTMENT Speed of price adjustment: ๐logเตฌ๐๐๐ก๐ถ๐ด๐๐๐ก๐๐เตฐ= ๐ฝเตฌlogเตฌ๐๐,๐กโ1๐ถ๐ด๐๐,๐กโ1๐๐ เตฐโ ๐ผ๐ธ๐๐กโ1เตฐ (2)
+๐1๐logเตฌ๐๐,๐กโ1๐ถ๐ด๐๐,๐กโ1๐๐ เตฐ+ ๐1๐๐ธ๐๐กโ1 + ๐ถ๐๐๐ก๐๐๐๐ + ๐๐๐๐๐๐๐ก
It is set in the error-correction/cointegration form where ๐ฝ quantifies how quickly the deviation from equilibrium is eliminated.
In Specification (2), equilibrium relationship between relative and the exchange rate are determined according to Specification (1).
While the equilibrium relationship nests the law of one price, it also allows deviations from the law of one price (i.e., ฮฑ can be less than one).
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Basic Results: Net Prices PT Speed (1) (2) Mean Price 0.698*** -0.158*** (0.080) (0.005) Median Price 0.698*** -0.170*** (0.082) (0.005) Minimum Price 0.677*** -0.169*** (0.042) (0.005) Within-seller 0.284*** -0.116*** (0.050) (0.013)
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DECOMPOSITION OF PRICE ADJUSTMENT๐๐๐๐ก = ๐พ๐ + ๐๐แlogแ๐๐,๐กโ1๐ถ๐ด๐๐,๐กโ1๐๐ แโ ๐ผเท๏ฟฝ๏ฟฝ๐ธ๐๐กโ1แ+ ๐ ๐1๐ธ๐๐กโ1 + ๐ ๐2๐๐๐,๐กโ1 + ๐๐๐ + ๐๐๐๐๐๐๐๐ก
๐ธ๐๐ข๐๐๐๐๐๐๐ข๐ ๐๐๐๐๐โก เตlogเตฌ๐๐,๐กโ1๐ถ๐ด๐๐,๐กโ1๐๐ เตฐโ ๐ผเท๏ฟฝ๏ฟฝ๐ธ๐๐กโ1เต > 0 โ Canadian goods are expensive
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DECOMPOSITION OF PRICE ADJUSTMENT๐๐๐๐ก = ๐พ๐ + ๐๐แlogแ๐๐,๐กโ1๐ถ๐ด๐๐,๐กโ1๐๐ แโ ๐ผเท๏ฟฝ๏ฟฝ๐ธ๐๐กโ1แ+ ๐ ๐1๐ธ๐๐กโ1 + ๐ ๐2๐๐๐,๐กโ1 + ๐๐๐ + ๐๐๐๐๐๐๐๐ก
๐ธ๐๐ข๐๐๐๐๐๐๐ข๐ ๐๐๐๐๐โก เตlogเตฌ๐๐,๐กโ1๐ถ๐ด๐๐,๐กโ1๐๐ เตฐโ ๐ผเท๏ฟฝ๏ฟฝ๐ธ๐๐กโ1เต > 0 โ Canadian goods are expensive
Moment, (mean prices)
CA US(1) (2)
Probability of price adjustment Any, -0.002 0.008Increase, -0.080*** 0.025***Decrease, 0.076*** -0.016***
Probability of exit -0.010 -0.006
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GOOD-SPECIFIC PASS-THROUGH
Pass-through (PT): logเตฌ๐๐๐ก๐ถ๐ด๐๐๐ก๐๐เตฐ= ๐ผ๐ธ๐๐ก + ๐ถ๐๐๐ก๐๐๐๐ + ๐๐๐๐๐๐๐ก,
Speed of price adjustment: ๐logเตฌ๐๐๐ก๐ถ๐ด๐๐๐ก๐๐เตฐ= ๐ฝเตฌlogเตฌ๐๐,๐กโ1๐ถ๐ด๐๐,๐กโ1๐๐ เตฐโ ๐ผ๐ธ๐๐กโ1เตฐ+
๐1๐logเตฌ๐๐,๐กโ1๐ถ๐ด๐๐,๐กโ1๐๐ เตฐ+ ๐1๐๐ธ๐๐กโ1 + ๐ถ๐๐๐ก๐๐๐๐ + ๐๐๐๐๐๐๐ก
Estimate ๐ผ and ๐ฝ for each good separately and related variation of ๐ผ and ๐ฝ across goods to โfundamentalsโ such returns to search, price stickiness, etc.
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DETERMINANTS OF PASS-THROUGH AND SPEED OF PRICE ADJ.
A higher search intensity should put a larger pressure on price convergence across sellers and countries.
Regressors
Price measure: Min
Path-throughSpeed of
Adjustment(1) (2)
Log(Median Price) 0.546*** 0.007 (0.124) (0.010)Log(Median Price)2 -0.054*** -0.001 (0.011) (0.001)Freq. of price change 1.882*** -0.073***
(0.236) (0.026)Log(Sellers) 2.152*** -0.147** (0.400) (0.060)Log(Sellers)2 -0.666*** 0.044** (0.123) (0.018)Stability of Sellers 0.903** 0.337*** (0.398) (0.052)Synchronization -0.474* 0.039 (0.265) (0.028)Average Reputation 0.139** -0.005 (0.053) (0.005)Observations 11,713 11,713R2 0.11 0.13
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DETERMINANTS OF PASS-THROUGH AND SPEED OF PRICE ADJ.
Sticky prices could delay price adjustment and make it incomplete.
Imbs et al. 2005, Mayoral and Gardea forthcoming, Rogoff 1996, Takhtamanova 2008
Regressors
Price measure: Min
Path-throughSpeed of
Adjustment(1) (2)
Log(Median Price) 0.546*** 0.007 (0.124) (0.010)Log(Median Price)2 -0.054*** -0.001 (0.011) (0.001)Freq. of price change 1.882*** -0.073***
(0.236) (0.026)Log(Sellers) 2.152*** -0.147** (0.400) (0.060)Log(Sellers)2 -0.666*** 0.044** (0.123) (0.018)Stability of Sellers 0.903** 0.337*** (0.398) (0.052)Synchronization -0.474* 0.039 (0.265) (0.028)Average Reputation 0.139** -0.005 (0.053) (0.005)Observations 11,713 11,713R2 0.11 0.13
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DETERMINANTS OF PASS-THROUGH AND SPEED OF PRICE ADJ.
Pass-through and speed of price adjustment could be affected not only by the degree of price stickiness at the level of individual seller but also to what extent price setting is staggered.
Regressors
Price measure: Min
Path-throughSpeed of
Adjustment(1) (2)
Log(Median Price) 0.546*** 0.007 (0.124) (0.010)Log(Median Price)2 -0.054*** -0.001 (0.011) (0.001)Freq. of price change 1.882*** -0.073***
(0.236) (0.026)Log(Sellers) 2.152*** -0.147** (0.400) (0.060)Log(Sellers)2 -0.666*** 0.044** (0.123) (0.018)Stability of Sellers 0.903** 0.337*** (0.398) (0.052)Synchronization -0.474* 0.039 (0.265) (0.028)Average Reputation 0.139** -0.005 (0.053) (0.005)Observations 11,713 11,713R2 0.11 0.13
43
DETERMINANTS OF PASS-THROUGH AND SPEED OF PRICE ADJ.
The number of sellers should be indicative of the degree of competition and thus can help discriminating price stickiness vs. market power
Regressors
Price measure: Min
Path-throughSpeed of
Adjustment(1) (2)
Log(Median Price) 0.546*** 0.007 (0.124) (0.010)Log(Median Price)2 -0.054*** -0.001 (0.011) (0.001)Freq. of price change 1.882*** -0.073***
(0.236) (0.026)Log(Sellers) 2.152*** -0.147** (0.400) (0.060)Log(Sellers)2 -0.666*** 0.044** (0.123) (0.018)Stability of Sellers 0.903** 0.337*** (0.398) (0.052)Synchronization -0.474* 0.039 (0.265) (0.028)Average Reputation 0.139** -0.005 (0.053) (0.005)Observations 11,713 11,713R2 0.11 0.13
44
DETERMINANTS OF PASS-THROUGH AND SPEED OF PRICE ADJ.
Easy entry into a market and limited time-horizons for sellers (this limits the scope for collusion) are likely to eliminate arbitrage opportunities and mis-pricing of goods faster
Regressors
Price measure: Min
Path-throughSpeed of
Adjustment(1) (2)
Log(Median Price) 0.546*** 0.007 (0.124) (0.010)Log(Median Price)2 -0.054*** -0.001 (0.011) (0.001)Freq. of price change 1.882*** -0.073***
(0.236) (0.026)Log(Sellers) 2.152*** -0.147** (0.400) (0.060)Log(Sellers)2 -0.666*** 0.044** (0.123) (0.018)Stability of Sellers 0.903** 0.337*** (0.398) (0.052)Synchronization -0.474* 0.039 (0.265) (0.028)Average Reputation 0.139** -0.005 (0.053) (0.005)Observations 11,713 11,713R2 0.11 0.13
45
Concluding remarks
โข Online retail is closer to a frictionless ideal marketโ More flexible prices
โข Law of one price is a reasonable approximationโ Mildly persistent price differentialsโ Pass-through is relatively highโ Speed of price adjustment is highโ All margins are working to eliminate price differentials
โข Large variation across goodsโ This variation can be systematically related to โfundamentalsโ
โข Soaring internet retail can bring the law of one price closer to reality
46
Concluding remarks
โข Online retail is closer to a frictionless ideal marketโ More flexible prices
โข Law of one price is a reasonable approximationโ Mildly persistent price differentialsโ Pass-through is relatively highโ Speed of price adjustment is highโ All margins are working to eliminate price differentials
โข Large variation across goodsโ This variation can be systematically related to โfundamentalsโ
โข Soaring internet retail can bring the law of one price closer to reality
47
Concluding remarks
โข Online retail is closer to a frictionless ideal marketโ More flexible prices
โข Law of one price is a reasonable approximationโ Mildly persistent price differentialsโ Pass-through is relatively highโ Speed of price adjustment is highโ All margins are working to eliminate price differentials
โข Large variation across goodsโ This variation can be systematically related to โfundamentalsโ
โข Soaring internet retail can bring the law of one price closer to reality
48
Concluding remarks
โข Online retail is closer to a frictionless ideal marketโ More flexible prices
โข Law of one price is a reasonable approximationโ Mildly persistent price differentialsโ Pass-through is relatively highโ Speed of price adjustment is highโ All margins are working to eliminate price differentials
โข Large variation across goodsโ This variation can be systematically related to โfundamentalsโ
โข Soaring internet retail can bring the law of one price closer to reality