Will e-commerce lead to sticky prices becoming extinct?

This idea did not strike me. With e-commerce getting a second life, one is seeing huge activity in this space. One also expects that prices change frequently on these sites as they monitor demand and supply on a more real time compared to online stores.

Much of macro revolves around sticky prices which means prices do not change immediately in case of a shock. This has huge ramifications for policy and research.

So, with e-com springing, should  we expect prices to become more flexible and sticky prices becoming extinct overtime?  Not really as suggested by Yuriy Gorodnichenko, Oleksandr Talavera, Slavik Sheremirov. They look at pricing behavior on certain e-com sites and say sticky prices are here to stay:

One Response to “Will e-commerce lead to sticky prices becoming extinct?”

  1. AA Says:

    There are also factors like delivery time. Right now, they don’t seem to matter much but prices can also be made sticky because of constraints in logistics and delivery chains that prevent e-com sites from changing prices quickly in response to demand (higher prices for faster delivery versus low prices for slower delivery). There may be other factors too that emanate from on-ground constraints that prevent prices from becoming too fluid.

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