Outline Pricing and the Euro Changeover: Cross-Country Comparisons

We study the impact of the Euro on prices charged by online retailers within the EU. Our data spans the period before and after the Euro was introduced, covers a variety of products, and includes countries inside and outside of the Eurozone. Our main finding is that the Euro changeover in 2002 neither mitigated price differences nor resulted in purchasing power parity for products sold online. In fact, evidence suggests that online prices in the Eurozone actually increased compared to prices of EU countries outside the Eurozone. Further, contrary to the predictions of purchasing-power-parity, we find significant differences in the prices charged by firms both within and across seven countries in the European Union. We also find significant differences in both the average price charged and the best price available in these countries. These conclusions are robust to a variety of controls.