Internet Retail Demand: Taxes, Geography, and Online-Offline Competition

Working Paper No. 12242 Data on sales of memory modules are used to explore several aspects of e-retail demand. There is a strong relationship between e-retail sales to a given state and sales tax rates that apply to purchases from online retailers. This suggests that there is substantial substituti...

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Published in:NBER Working Paper Series 2006-05, p.12242
Main Authors: Ellison, Glenn, Sara Fisher Ellison
Format: Article
Language:English
Subjects:
Competition
Consumer behavior
Consumers
Economic theory
Geography
Internet
Prices
Rationality
Retail sales
Retail stores
Sales taxes
Tax rates
Websites
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Sara Fisher Ellison
description Working Paper No. 12242 Data on sales of memory modules are used to explore several aspects of e-retail demand. There is a strong relationship between e-retail sales to a given state and sales tax rates that apply to purchases from online retailers. This suggests that there is substantial substitution between online and online retail, and tax avoidance may be an important contributor to e-retail activity. Geography matters in two ways: we find some evidence that consumers prefer purchasing from firms in nearby states to benefit from faster shipping times as well as evidence of a separate preference for buying from in-state firms. Consumers appear fairly rational in some ways, but boundedly rational in others.
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source ABI/INFORM Global; Alma/SFX Local Collection
subjects Competition
Consumer behavior
Consumers
Economic theory
Geography
Internet
Prices
Rationality
Retail sales
Retail stores
Sales taxes
Tax rates
Websites
title Internet Retail Demand: Taxes, Geography, and Online-Offline Competition
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