More Amazon Effects: Online Competition and Pricing Behaviors
37 Pages Posted: 8 Oct 2018 Last revised: 8 Sep 2024
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: 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
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