Sales Taxes and Internet Commerce / Liran Einav, Dan Knoepfle, Jonathan D. Levin, Neel Sundaresan.

Format:

Book

Author/Creator:

Einav, Liran.

Contributor:

National Bureau of Economic Research.

Knoepfle, Dan.

Levin, Jonathan D.

Sundaresan, Neel.

Series:

Working Paper Series (National Bureau of Economic Research) no. w18018.

NBER working paper series no. w18018

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2012.

Summary:

We estimate the sensitivity of Internet retail purchasing to sales taxes using data from the eBay marketplace. Our first approach exploits the fact that seller locations are revealed only after buyers have expressed interest in an item by clicking on its listing. We use millions of location "surprises" to estimate price elasticities with respect to the effective sales tax. We then use aggregated data to estimate cross-state substitution parameters, and substitution between offline and online purchases, relying on the variation in state and local sales taxes, and on changes in these rates over time. We find substantial sensitivity to sales taxes. Using our item-level approach, we find a price elasticity of around -2 for interested buyers. Using our aggregate approach, we find that a one percentage point increase in a state's sales tax increases online purchases by state residents by just under two percent, but decreases their online purchases from home-state retailers by 3-4 percent.

Notes:

Print version record

April 2012.