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Evaluating the Impact of Online Market Integration—Evidence from the EU Portable PC Market

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  • Néstor Duch-Brown
  • Lukasz Grzybowski
  • André Romahn
  • Frank Verboven

Abstract

We develop a framework to evaluate the impact of market integration, accounting for spillovers between multiple distribution channels. We adapt the standard random coefficients logit demand model to allow for substitution between channels and consumer arbitrage across countries. We apply our framework to the European portable PC market, where geoblocking practices that restrict online cross-border trade have recently been banned. Consumers in high income countries gain most from price convergence, while consumers in other countries may be worse off. The total consumer and welfare gains from online market integration are more modest and mainly due to increased product choice rather than reduced price discrimination.

Suggested Citation

  • Néstor Duch-Brown & Lukasz Grzybowski & André Romahn & Frank Verboven, 2023. "Evaluating the Impact of Online Market Integration—Evidence from the EU Portable PC Market," American Economic Journal: Microeconomics, American Economic Association, vol. 15(4), pages 268-305, November.
    • Handle: RePEc:aea:aejmic:v:15:y:2023:i:4:p:268-305
    DOI: 10.1257/mic.20200254
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    Cited by:

    1. Menz, Jan-Oliver & Wieland, Elisabeth & Mehrhoff, Jens, 2022. "Estimating the impact of quality adjustment on consumer price inflation," Discussion Papers 49/2022, Deutsche Bundesbank.
    2. Verboven, Frank & Canzian, Giulia & Mazzarella, Gianluca & Ranchail, Louis & Verzillo, Stefano, 2021. "Evaluating the Impact of Price Caps - Evidence from the European Roam-Like-at-Home Regulation," CEPR Discussion Papers 16554, C.E.P.R. Discussion Papers.
    3. Duch-Brown, Néstor & Grzybowski, Lukasz & Romahn, André & Verboven, Frank, 2021. "Are online markets more integrated than traditional markets? Evidence from consumer electronics," Journal of International Economics, Elsevier, vol. 131(C).
    4. Bourreau, Marc & Manenti, Fabio M., 2023. "Selling cross-border in online markets: The impact of the ban on geoblocking strategies," International Journal of Industrial Organization, Elsevier, vol. 86(C).

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    More about this item

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L63 - Industrial Organization - - Industry Studies: Manufacturing - - - Microelectronics; Computers; Communications Equipment
    • L81 - Industrial Organization - - Industry Studies: Services - - - Retail and Wholesale Trade; e-Commerce

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