The impact of price adjustment costs on price dispersion in e-commerce

We analyze price dispersion using panel data from a large comparison site. use past pricing behavior to instrument for potential endogeneity of firms select into certain product markets. Our main result is that greater adjustment costs in even e-commerce markets where cost are thought be negligible. Although the impact on became weaker over time, causal effect still present at end our observation period. results robust many alternative empirical specifications. also control range explanations dispersion, such as search cost, service differentiation, obfuscation, vertical restraints, and market structure.