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DID THE EURO FOSTER ONLINE PRICE COMPETITION? EVIDENCE FROM AN INTERNATIONAL PRICE COMPARISON SITE
Author(s) -
BAYE MICHAEL R.,
GATTI J. RUPERT J.,
KATTUMAN PAUL,
MORGAN JOHN
Publication year - 2006
Publication title -
economic inquiry
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.823
H-Index - 72
eISSN - 1465-7295
pISSN - 0095-2583
DOI - 10.1093/ei/cbj015
Subject(s) - changeover , economics , context (archaeology) , competition (biology) , currency union , variety (cybernetics) , common currency , monetary economics , price setting , european union , currency , international economics , microeconomics , paleontology , ecology , transmission (telecommunications) , artificial intelligence , computer science , electrical engineering , biology , engineering
We study the impact of the Euro on prices charged by online retailers within the European Union. Our data span the period before and after the Euro was introduced, cover a variety of products, and include countries inside and outside of the Eurozone. After controlling for cost, demand, and market structure effects, we show that the pure Euro changeover effect is to raise average prices in the Eurozone by 3 % and average minimum prices by 7%. Finally, we develop a model of online pricing in the context of currency unions and show that these price patterns are broadly consistent with those of clearinghouse models. (JEL D400, D830, F150, L130, M370 )