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Price Stickiness in the US and Europe Revisited: Evidence from Internet Prices *
Author(s) -
Lünnemann Patrick,
Wintr Ladislav
Publication year - 2011
Publication title -
oxford bulletin of economics and statistics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.131
H-Index - 73
eISSN - 1468-0084
pISSN - 0305-9049
DOI - 10.1111/j.1468-0084.2011.00657.x
Subject(s) - economics , the internet , logit , econometrics , brick and mortar , product (mathematics) , function (biology) , price setting , panel data , monetary economics , microeconomics , computer science , world wide web , geometry , mathematics , evolutionary biology , biology
Abstract This paper compares price stickiness on the Internet and in traditional brick‐and‐mortar stores and examines differences across five countries: France, Germany, Italy, the UK and the US. Contrary to conventional retail prices, we find that Internet prices change less often in the US than in EU countries. However, this does not hold for all product categories. Second, prices on the Internet are not necessarily more flexible than prices in brick‐and‐mortar stores. Third, our dataset reveals substantial heterogeneity in the frequency of price changes across Internet shops. Finally, panel logit estimates suggest that the likelihood of observing a price change is a function of both state‐dependent and time‐dependent factors.