According to US government data, almost 10% of total retail sales take place via e-commerce. Compared to traditional brick-and-mortar sellers, online vendors tend to adjust their pricing more frequently and set identical prices across geographies. This “Amazon effect” may be one driver of lower inflation levels in the US economy. Professor Alberto Cavallo scrutinizes the economics of the online sales environment and its ramifications on inflation. Although it could have been more succinct, this scholarly report will nonetheless reward analysts and policy experts who wish to explore the nuances of online pricing.
In this summary, you will learn
- How online retailers differ from traditional outlets in their pricing models,
- Why these behaviors create pricing compression and
- What impact this has on inflationary pressures in the economy.
About the Author
Alberto Cavallo is an associate professor at Harvard Business School.