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Assessing the gains from e-commerce

Feb 2019
Working Paper
19-004
By  Paul Dolfen, Liran Einav, Peter J. Klenow, Benjamin Klopack, Jonathan D. Levin, Larry Levin, Wayne Best

E-Commerce represents a rapidly growing share of consumer spending in the U.S. We use transactions-level data on credit and debit cards from Visa, Inc. between 2007 and 2017 to quantify the resulting consumer surplus. We estimate that E-Commerce spending reached 8% of consumption by 2017, yielding consumers the equivalent of a 1% permanent boost to their consumption, or over $1,000 per household. While some of the gains arose from saving travel costs of buying from local merchants, most of the gains stemmed from substituting to online merchants. Higher income cardholders gained more, as did consumers in more densely populated counties.