Abstract

http://ssrn.com/abstract=2422403
 


 



The 'Amazon Tax': Empirical Evidence from Amazon and Main Street Retailers


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

March 1, 2015

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

Abstract:     
Online retailers have gained a total price advantage over brick-and-mortar retailers since the formers generally are not required to collect sales tax. Recently, several states have implemented laws requiring that Amazon collect sales tax during checkout. Using transaction-level data, we document that households living in these states reduce Amazon purchases by 11%, implying an elasticity of –1.5. The effect is more pronounced for large purchases (e.g., ≥ $250), for which we estimate a reduction of 25% in purchases and an elasticity of –3.5. We find some weak evidence of substitution of the lost purchases towards other online and brick-and-mortar retailers.

Number of Pages in PDF File: 27

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: April 2, 2015

Suggested Citation

Baugh, Brian and Ben-David, Itzhak and Park, Hoonsuk, The 'Amazon Tax': Empirical Evidence from Amazon and Main Street Retailers (March 1, 2015). Charles A. Dice Center Working Paper No. 2014-05; Fisher College of Business Working Paper No. 2014-03-05. 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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