Consumer Arbitrage in Cross-Border E-Commerce
32 Pages Posted: 17 Apr 2018
Date Written: March 2018
In today's internet markets consumers can search for, find and compare prices worldwide. Online, information circulates faster than offline and arbitrage opportunities such as the ones arising from currency shocks are easily unveiled. In this paper, we estimate for the first time exchange rate elasticities for cross-border e-commerce transactions. Exploiting a new high-frequency database on international transactions of parcels, we find that a 1 % appreciation of the domestic currency increases e-commerce imports by 0.7 %. Comparing the result with traditional estimates in offline markets, this implies a 50 % exchange rate pass-through online.
Keywords: Online trade, Arbitrage, Exchange rate pass-through
JEL Classification: F14, F31
Suggested Citation: Suggested Citation