Consumer Benefits from the EU Digital Single Market: Evidence from Household Appliances Markets
Institute for Prospective Technological Studies Digital Economy Working Paper No. 2014/03
30 Pages Posted: 8 Jun 2014
Date Written: June 6, 2014
Abstract
This paper investigates price differences between online and offline retail channels in the EU Digital Single Market. Using price and sales data for ten household appliances product categories sold both offline and online in 21 EU countries in 2009, and correcting for product characteristics, we find evidence that online prices and price dispersion are lower than offline. Online demand is more price-elastic. We compute consumers' welfare effects for different scenarios. E-commerce increases consumer surplus by €34 billion or 0.3% of EU-27 GDP. Full online price convergence across the EU towards the lowest observed average price would further increase welfare by 0.02% of GDP.
Keywords: price dispersion, e-commerce, consumer welfare, online trade, price effects
JEL Classification: L11; L15; L68
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