Online Pricing and the Euro Changeover: Cross-Country Comparisons

38 Pages Posted: 11 Nov 2002

See all articles by Michael R. Baye

Michael R. Baye

Indiana University - Kelley School of Business - Department of Business Economics & Public Policy

John Morgan

University of California, Berkeley - Economic Analysis & Policy Group

Rupert Gatti

University of Cambridge - Faculty of Economics

Paul Kattuman

University of Cambridge - Judge Business School

Date Written: September 10, 2002

Abstract

We study the impact of the Euro on prices charged by online retailers within the EU. Our data spans the period before and after the Euro was introduced, covers a variety of products, and includes countries inside and outside of the Eurozone. Our main finding is that the Euro changeover in 2002 neither mitigated price differences nor resulted in purchasing power parity for products sold online. In fact, evidence suggests that online prices in the Eurozone actually increased compared to prices of EU countries outside the Eurozone. Further, contrary to the predictions of purchasing-power-parity, we find significant differences in the prices charged by firms both within and across seven countries in the European Union. We also find significant differences in both the average price charged and the best price available in these countries. These conclusions are robust to a variety of controls.

Keywords: Price competition, Euro, Internet

JEL Classification: D400, D830, F150, L130, M370

Suggested Citation

Baye, Michael Roy and Morgan, John and Gatti, J. Rupert J. and Kattuman, Paul A., Online Pricing and the Euro Changeover: Cross-Country Comparisons (September 10, 2002). Available at SSRN: https://ssrn.com/abstract=336044 or http://dx.doi.org/10.2139/ssrn.336044

Michael Roy Baye

Indiana University - Kelley School of Business - Department of Business Economics & Public Policy ( email )

Bloomington, IN 47405
United States
812-855-2779 (Phone)
812-855-3354 (Fax)

John Morgan

University of California, Berkeley - Economic Analysis & Policy Group ( email )

Berkeley, CA 94720
United States
510-642-2669 (Phone)
810-885-5959 (Fax)

HOME PAGE: http://faculty.haas.berkeley.edu/rjmorgan/

J. Rupert J. Gatti (Contact Author)

University of Cambridge - Faculty of Economics ( email )

Austin Robinson Building
Sidgwick Avenue
Cambridge, CB3 9DD
United Kingdom
+44 1223 339929 (Phone)

Paul A. Kattuman

University of Cambridge - Judge Business School ( email )

Trumpington Road
Cambridge CB2 1AG
United Kingdom
+44 1223 764 136 (Phone)

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