More Amazon Effects: Online Competition and Pricing Behaviors

37 Pages Posted: 8 Oct 2018 Last revised: 8 Sep 2024

See all articles by Alberto Cavallo

Alberto Cavallo

Harvard University - Business School (HBS)

Date Written: October 2018

Abstract

I study how online competition, with its algorithmic pricing technologies and the transparency of the Internet, can change the pricing behavior of large retailers and affect aggregate inflation dynamics. In particular, I show that online competition has raised both the frequency of price changes and the degree of uniform pricing across locations in the U.S. over the past 10 years. These changes make retail prices more sensitive to aggregate ``nationwide" shocks, increasing the pass-through of both gas prices and nominal exchange rate fluctuations.

Suggested Citation

Cavallo, Alberto, More Amazon Effects: Online Competition and Pricing Behaviors (October 2018). NBER Working Paper No. w25138, Available at SSRN: https://ssrn.com/abstract=3262401

Alberto Cavallo (Contact Author)

Harvard University - Business School (HBS) ( email )

Soldiers Field Road
Morgan 270C
Boston, MA 02163
United States

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