Are online markets more integrated than traditional markets? Evidence from consumer electronics

Néstor Duch-Brown (1) , Lukasz Grzybowski (2, 3, 4) , André Romahn (5) , Frank Verboven (6)

1 Joint Research Centre of the European Commission
2 SES - Département Sciences Economiques et Sociales
3 ECOGE - Economie Gestion
4 IP Paris - Institut Polytechnique de Paris
5 Heinrich Heine Universität Düsseldorf = Heinrich Heine University [Düsseldorf]
6 KU Leuven - Catholic University of Leuven = Katholieke Universiteit Leuven

Did the Internet make international markets more integrated? To address this question, we study long-term international price differences and their speed of convergence, based on a unique data base for identical goods sold in both online and traditional "brick-and-mortar" distribution channels, covering ten European countries. We find that long-term international price differences are closely comparable between both distribution channels. Furthermore, international price differences converge only slightly faster online than offline, and the differences in the international price differences between online and offline converge at a very fast rate. Finally, regardless of the distribution channel, long-term price differences are lower and converge faster within the same currency union. Our findings imply that online markets are currently not more integrated than traditional markets.

Keywords: L13; L68; L86

Domains: Economics and Finance

Néstor Duch-Brown, Lukasz Grzybowski, André Romahn, Frank Verboven. Are online markets more integrated than traditional markets? Evidence from consumer electronics. Journal of International Economics, 2021, 131, pp.103476. ⟨10.1016/j.jinteco.2021.103476⟩. ⟨hal-03235901⟩