Within-retailer price dispersion in e-commerce: Prevalence, magnitude and determinants

Abstract

Whereas between-retailer price discrepancies are well documented, less is known about price differentiations within a single chain. This article investigates the prevalence and the magnitude of online within-retailer price dispersion over time. Amazon is the US largest online food retailer (and the second largest retailer in the entire US grocery market), and we use the rich daily price data on food and beverages sold by Amazon Fresh in New York City and Los Angeles to shed light on the prevalence, magnitude and determinants of the within-retailer price dispersion over time. We show that differences in economic indicators, competitive pressure and COVID-19 exposure across locations contribute to price dispersion. Once those factors are controlled for, we observe a negative linear time trend in the share and magnitude of non-identical prices confirming an increasing market integration as e-commerce matures.