Abstract

http://ssrn.com/abstract=2422403
 


 



Can Taxes Shape an Industry? Evidence from the Implementation of the 'Amazon Tax'


Brian Baugh


Ohio State University (OSU) - Fisher College of Business

Itzhak Ben-David


Ohio State University - Fisher College of Business, Finance Department; National Bureau of Economic Research (NBER)

Hoonsuk Park


Ohio State University (OSU) - Fisher College of Business

November 1, 2015

Fisher College of Business Working Paper No. 2014-03-05
Charles A. Dice Center Working Paper No. 2014-05

Abstract:     
Online retailers have maintained a price advantage over brick-and-mortar retailers since they did not collect sales tax. Recently, several states have required that the online retailer Amazon collect sales tax during checkout. Using transaction-level data, we document that households living in these states reduce Amazon purchases by 8% after sales taxes were implemented, implying an elasticity of -1.1. The effect is more pronounced for large purchases, for which we estimate a reduction of 11% in purchases and an elasticity of -1.5. Studying competitors in the electronics field, we detect some evidence of substitution of the lost purchases towards competing retailers.

Number of Pages in PDF File: 32

Keywords: Amazon Tax, price elasticity, sales tax, Internet commerce

JEL Classification: D12, D40, L51


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Date posted: April 10, 2014 ; Last revised: February 16, 2016

Suggested Citation

Baugh, Brian and Ben-David, Itzhak and Park, Hoonsuk, Can Taxes Shape an Industry? Evidence from the Implementation of the 'Amazon Tax' (November 1, 2015). Fisher College of Business Working Paper No. 2014-03-05; Charles A. Dice Center Working Paper No. 2014-05. Available at SSRN: http://ssrn.com/abstract=2422403 or http://dx.doi.org/10.2139/ssrn.2422403

Contact Information

Brian Baugh
Ohio State University (OSU) - Fisher College of Business ( email )
2100 Neil Avenue
Columbus, OH 43210-1144
United States

Itzhak Ben-David (Contact Author)
Ohio State University - Fisher College of Business, Finance Department ( email )
2100 Neil Avenue
Fisher 700D
Columbus, OH 43210-1144
United States
773 988 1353 (Phone)
HOME PAGE: http://fisher.osu.edu/fin/faculty/Ben-David/index.htm

National Bureau of Economic Research (NBER) ( email )
1050 Massachusetts Avenue
Cambridge, MA 02138
United States
HOME PAGE: http://fisher.osu.edu/fin/faculty/Ben-David/
Hoonsuk Park
Ohio State University (OSU) - Fisher College of Business ( email )
2100 Neil Avenue
Columbus, OH 43210-1144
United States

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