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Consumer benefits from the EU Digital Single Market: evidence from household appliances markets

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This paper investigates price differences between online and offline retail channels in the EU Digital Single Market. Using price and sales data for ten different product categories sold both offline and online in 21 EU countries in 2009, and correcting for product characteristics, we find evidence that confirms the theory: online prices are lower than offline prices, price dispersion also tends to be lower online and online demand is more price-elastic than offline demand. In addition, from our demand estimates we compute the consumers' welfare effects of different scenarios. Our results indicate that a full price convergence across EU member states towards the lowest observed average price would significantly benefit consumers. Moreover, eliminating e-commerce would reduce consumer surplus in €34 billion while an increase in online sales between 10% and 25% would represent a change in consumer welfare in the range of €3.4 billion to €13 billion.

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File URL: https://ec.europa.eu/jrc/sites/jrcsh/files/ReqNo_JRC89991_jrc89991%20without%20identifiers.pdf.pdf
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Paper provided by Joint Research Centre (Seville site) in its series JRC Working Papers on Digital Economy with number 2014-03.

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Length: 30 pages
Date of creation: Jun 2014
Handle: RePEc:ipt:decwpa:201403
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  15. Estrella Gomez & Bertin Martens & Geomina Turlea, 2013. "Drivers and impediments for cross-border e-commerce in the EU," JRC Working Papers on Digital Economy 2013-02, Joint Research Centre (Seville site).
  16. Eugene Orlov, 2011. "How Does The Internet Influence Price Dispersion? Evidence From The Airline Industry," Journal of Industrial Economics, Wiley Blackwell, vol. 59(1), pages 21-37, March.
  17. George A. Akerlof, 1970. "The Market for "Lemons": Quality Uncertainty and the Market Mechanism," The Quarterly Journal of Economics, Oxford University Press, vol. 84(3), pages 488-500.
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  19. George J. Stigler, 1961. "The Economics of Information," Journal of Political Economy, University of Chicago Press, vol. 69, pages 213-213.
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