Are Online and Offline Prices Similar? Evidence from Large Multi-Channel Retailers

Alberto  Cavallo

Article | American Economic Review

Are Online and Offline Prices Similar? Evidence from Large Multi-Channel Retailers

Abstract

Online prices are increasingly used for measurement and research applications, yet little is known about their relation to prices in physical stores, where most retail transactions occur. I conduct the first large-scale comparison of prices simultaneously collected from the websites and physical stores of 56 large multi-channel retailers in 10 countries. I find that price levels are identical about 72 percent of the time. Price changes are not synchronized but have similar frequencies and average sizes. These results have implications for national statistical offices, researchers using online data, and anyone interested in the effect of the Internet on retail prices.

Keywords: Online Prices; Offline Prices; Multi-channel retailers; Price; Internet; Measurement and Metrics; Retail Industry;

Format: Print

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Citation:

Cavallo, Alberto. "Are Online and Offline Prices Similar? Evidence from Large Multi-Channel Retailers." American Economic Review 107, no. 1 (January 2017): 283–303.

Supplemental Information

Data and Replication Files

Zip file contains the raw data and STATA 14 do files (scripts) needed to replicate all the results in the paper and appendix.
Appendix
Tables in Excel Format

In early 2020, a coronavirus pandemic swept the globe, ushering in unprecedented disruptions to the global economy. Both supply and demand were decimated by lockdowns and border closings, as well as reduced spending by fearful consumers. In response, governments around the world made equally unprecedented policy moves, spending trillions of dollars on fiscal stimulus measures to bridge the gap during the self-imposed shutdown. As the pandemic progressed, governments had to weigh the costs between loss of life due to opening up their economies and the economic devastation caused by delaying a reopening.

The Covid-19 Pandemic has led to changes in consumer expenditure patterns that can introduce significant bias in the measurement of inflation. I use data collected from credit and debit transactions in the US to update the official basket weights and estimate the impact on the Consumer Price Index (CPI). I find that the Covid inflation rate is higher than the official CPI in the US, for both headline and core indices. I also find similar results with Covid baskets in 12 out of 17 additional countries. The difference is significant and growing over time, as social-distancing rules and behaviors are making consumers spend relatively more on food and other categories with rising inflation, and relatively less on transportation and other categories experiencing significant deflation.

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Are Online and Offline Prices Similar? Evidence from Large Multi-Channel Retailers

Abstract

Citation:

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