2019
Article
Jackson Hole Economic Symposium Conference Proceedings (Federal Reserve Bank of Kansas City)

More Amazon Effects: Online Competition and Pricing Behaviors

Format:Print

Abstract

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

Keywords

Amazon; Online Prices; Inflation; Uniform Pricing; Price Stickiness; Monetary Economics; Economics; Macroeconomics; Inflation and Deflation; System Shocks; United States

Citation

Cavallo, Alberto. "More Amazon Effects: Online Competition and Pricing Behaviors." Jackson Hole Economic Symposium Conference Proceedings (Federal Reserve Bank of Kansas City) (2019).