New research reveals surprising impact of online prices on economy.
The article explores how prices react to different economic shocks and why they stay the same in certain situations. The researchers use price dispersion data to understand price stickiness and analyze online market pricing. They find that the relationship between price dispersion and inflation is actually negative, contrary to standard models. Sales play a crucial role in this relationship. Additionally, the study shows that models not matching the data can lead to incorrect welfare measurements. The research also delves into price-setting practices in online markets using a unique dataset, revealing insights into pricing strategies and consumer behavior.