IDEAS home Printed from https://ideas.repec.org/p/ipt/decwpa/2015-09.html
   My bibliography  Save this paper

The macro-economic impact of e-commerce in the EU Digital Single Market

Author

Listed:

Abstract

This paper examines the economic impact of a change in retail technology - the shift from offline to online shopping – and a change in policy – measures to reduce the barriers to online trade perceived by consumers and retailers. Contrary to the prevalent micro-economic partial equilibrium consumer modelling approach to e-commerce, we use a macro-economic general equilibrium model that brings together the impact on consumers as well as on producers. We use survey data on cross-border e-commerce between EU Member States to estimate the implied cross-border trade cost reduction when consumers move from offline to online consumption as well as the implied costs of perceived regulatory barriers to e-commerce. We distinguish between cross-border and domestic trade costs effects. We find that cross-bordere-commerce reduces trade costs compared to offline trade. Increased price competition squeezes domestic retail price margins and has a negative output effect in that sector (-2.6%). However, the resulting retail efficiency gains have a positive effect on production in other sectors (between 0.9 and 2.6%) and on household consumption (+1.07%). The combined macro-economic effect of these transmission channels adds 0.14% to EU GDP. Additional policy measures to facilitate cross-border e-commerce between EU Member States could add another 0.3% to household consumption and 0.04% to GDP, or 0.03% in the more conservative estimate. The relatively weak GDP effect in comparison with the production and consumption effects indicates that the shift from offline to online retail induces considerable welfare redistribution from retailing to other sectors and to households, more so than a production effect.

Suggested Citation

  • Melisande Cardona & Nestor Duch-Brown & Joseph Francois & Bertin Martens & Fan Yang, 2015. "The macro-economic impact of e-commerce in the EU Digital Single Market," JRC Working Papers on Digital Economy 2015-09, Joint Research Centre (Seville site).
  • Handle: RePEc:ipt:decwpa:2015-09
    as

    Download full text from publisher

    File URL: https://ec.europa.eu/jrc/sites/jrcsh/files/JRC98272.pdf
    Download Restriction: no

    Other versions of this item:

    References listed on IDEAS

    as
    1. Jeffrey Frankel & David Parsley & Shang-Jin Wei, 2012. "Slow Pass-through Around the World: A New Import for Developing Countries?," Open Economies Review, Springer, vol. 23(2), pages 213-251, April.
    2. Lendle, Andreas & Olarreaga, Marcelo & Schropp, Simon & Vézina, Pierre-Louis, 2012. "There goes gravity: how eBay reduces trade costs," CEPR Discussion Papers 9094, C.E.P.R. Discussion Papers.
    3. Dixit, Avinash K & Stiglitz, Joseph E, 1977. "Monopolistic Competition and Optimum Product Diversity," American Economic Review, American Economic Association, vol. 67(3), pages 297-308, June.
    4. Frederic S. Mishkin, 2008. "Exchange rate pass-through and monetary policy: a speech at the Norges Bank Conference on Monetary Policy, Oslo, Norway, March 7, 2008," Speech 373, Board of Governors of the Federal Reserve System (U.S.).
    5. Ali Hortaçsu & F. Asís Martínez-Jerez & Jason Douglas, 2009. "The Geography of Trade in Online Transactions: Evidence from eBay and MercadoLibre," American Economic Journal: Microeconomics, American Economic Association, vol. 1(1), pages 53-74, February.
    6. Francois, Joseph F & Wooton, Ian, 2001. "Trade in International Transport Services: The Role of Competition," Review of International Economics, Wiley Blackwell, vol. 9(2), pages 249-261, May.
    7. Gomez-Herrera, Estrella & Martens, Bertin & Turlea, Geomina, 2014. "The drivers and impediments for cross-border e-commerce in the EU," Information Economics and Policy, Elsevier, vol. 28(C), pages 83-96.
    8. Burstein, Ariel T. & Neves, Joao C. & Rebelo, Sergio, 2003. "Distribution costs and real exchange rate dynamics during exchange-rate-based stabilizations," Journal of Monetary Economics, Elsevier, vol. 50(6), pages 1189-1214, September.
    9. Rebecca Hellerstein, 2005. "A Decomposition of the Sources of Incomplete Cross-Border Transmission," 2005 Meeting Papers 805, Society for Economic Dynamics.
    10. Erik Brynjolfsson & Yu (Jeffrey) Hu & Michael D. Smith, 2003. "Consumer Surplus in the Digital Economy: Estimating the Value of Increased Product Variety at Online Booksellers," Management Science, INFORMS, vol. 49(11), pages 1580-1596, November.
    11. Blum, Bernardo S. & Goldfarb, Avi, 2006. "Does the internet defy the law of gravity?," Journal of International Economics, Elsevier, vol. 70(2), pages 384-405, December.
    12. Nestor Duch-Brown & Bertin Martens, 2015. "Barriers to Cross-border eCommerce in the EU Digital Single Market," JRC Working Papers on Digital Economy 2015-07, Joint Research Centre (Seville site).
    13. Melisande Cardona & Nestor Duch-Brown & Bertin Martens, 2015. "Consumer perceptions of cross-border e-commerce in the EU," JRC Working Papers on Digital Economy 2015-06, Joint Research Centre (Seville site).
    14. Joseph Francois & Hans Van Meijl & Frank Van Tongeren, 2005. "Trade liberalization in the Doha Development Round," Economic Policy, CEPR;CES;MSH, vol. 20(42), pages 349-391, April.
    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).
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    e-commerce; online trade; cross-border trade; international online trade; trade costs; trade barriers;

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F47 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Forecasting and Simulation: Models and Applications

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ipt:decwpa:2015-09. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Publication Officer). General contact details of provider: http://edirc.repec.org/data/ipjrces.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.