What Drives Price Dispersion in the European E-commerce Industry?

An important aspect of economic integration of the European Union is price convergence on digital single market. In this study, we propose a novel way to measure price dispersion in the e-commerce industry, using a custom made web-scraping tool. We target all the major price comparisons sites in the 26 EU member states, which enables us to collect price signals from thousands of retail shops operating on-line. We analyse pricing data of 182 branded products sold on-line across the EU, representing the most popular categories: fashion, consumer electronics, gaming and software, and cosmetics. We find considerable dispersion of both pre and post-vat on-line prices ranging from 20% to 40%, depending on the product category. The observed on-line price dispersion is driven by both cost factors and the level of per capita income, which is consistent with the view that producers or large distributors might engage in strategic price discrimination induced by income heterogeneity.