How Sales Taxes Affect Customer and Firm Behavior: The Role of Search on the Internet
When a multichannel retailer opens its first retail store in a state, the firm is obligated to collect sales taxes on all Internet and catalog orders shipped to that state. This article assesses how opening a store affects Internet and catalog demand. The authors analyze purchase behavior among cust...
| Main Authors: | , , , |
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| Other Authors: | |
| Format: | Article |
| Language: | en_US |
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American Marketing Association
2011
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| Online Access: | http://hdl.handle.net/1721.1/67872 https://orcid.org/0000-0003-2758-0116 https://orcid.org/0000-0002-1847-4832 |
| _version_ | 1826193410543845376 |
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| author | Anderson, Eric T. Fong, Nathan Minsheng Simester, Duncan Tucker, Catherine Elizabeth |
| author2 | Sloan School of Management |
| author_facet | Sloan School of Management Anderson, Eric T. Fong, Nathan Minsheng Simester, Duncan Tucker, Catherine Elizabeth |
| author_sort | Anderson, Eric T. |
| collection | MIT |
| description | When a multichannel retailer opens its first retail store in a state, the firm is obligated to collect sales taxes on all Internet and catalog orders shipped to that state. This article assesses how opening a store affects Internet and catalog demand. The authors analyze purchase behavior among customers who live far from the retail store but must now pay sales taxes on catalog and Internet purchases. A comparable group of customers in a neighboring state serves as a control. The results show that Internet sales decrease significantly, but catalog sales are unaffected. Further investigation indicates that the difference in these outcomes is partly attributable to the ease with which customers can search for lower prices at competing retailers. The authors extend the analysis to a panel of multichannel firms and show that retailers that earn a large proportion of their revenue from direct channels avoid opening a first store in high-tax states. They conclude that current U.S. sales taxes laws have significant effects on both customer and firm behavior. |
| first_indexed | 2024-09-23T09:38:50Z |
| format | Article |
| id | mit-1721.1/67872 |
| institution | Massachusetts Institute of Technology |
| language | en_US |
| last_indexed | 2024-09-23T09:38:50Z |
| publishDate | 2011 |
| publisher | American Marketing Association |
| record_format | dspace |
| spelling | mit-1721.1/678722022-09-26T12:49:16Z How Sales Taxes Affect Customer and Firm Behavior: The Role of Search on the Internet Anderson, Eric T. Fong, Nathan Minsheng Simester, Duncan Tucker, Catherine Elizabeth Sloan School of Management Tucker, Catherine Fong, Nathan Minsheng Simester, Duncan Tucker, Catherine Elizabeth When a multichannel retailer opens its first retail store in a state, the firm is obligated to collect sales taxes on all Internet and catalog orders shipped to that state. This article assesses how opening a store affects Internet and catalog demand. The authors analyze purchase behavior among customers who live far from the retail store but must now pay sales taxes on catalog and Internet purchases. A comparable group of customers in a neighboring state serves as a control. The results show that Internet sales decrease significantly, but catalog sales are unaffected. Further investigation indicates that the difference in these outcomes is partly attributable to the ease with which customers can search for lower prices at competing retailers. The authors extend the analysis to a panel of multichannel firms and show that retailers that earn a large proportion of their revenue from direct channels avoid opening a first store in high-tax states. They conclude that current U.S. sales taxes laws have significant effects on both customer and firm behavior. 2011-12-22T14:33:12Z 2011-12-22T14:33:12Z 2010-04 2009-01 Article http://purl.org/eprint/type/JournalArticle 0022-2437 http://hdl.handle.net/1721.1/67872 Anderson, Eric T. et al. “How Sales Taxes Affect Customer and Firm Behavior: The Role of Search on the Internet.” Journal of Marketing Research 47.2 (2010): 229-239. https://orcid.org/0000-0003-2758-0116 https://orcid.org/0000-0002-1847-4832 en_US http://dx.doi.org/10.1509/jmkr.47.2.229 Journal of Marketing Research Creative Commons Attribution-Noncommercial-Share Alike 3.0 http://creativecommons.org/licenses/by-nc-sa/3.0/ application/pdf American Marketing Association Prof, Tucker via Alex Caracuzzo |
| spellingShingle | Anderson, Eric T. Fong, Nathan Minsheng Simester, Duncan Tucker, Catherine Elizabeth How Sales Taxes Affect Customer and Firm Behavior: The Role of Search on the Internet |
| title | How Sales Taxes Affect Customer and Firm Behavior: The Role of Search on the Internet |
| title_full | How Sales Taxes Affect Customer and Firm Behavior: The Role of Search on the Internet |
| title_fullStr | How Sales Taxes Affect Customer and Firm Behavior: The Role of Search on the Internet |
| title_full_unstemmed | How Sales Taxes Affect Customer and Firm Behavior: The Role of Search on the Internet |
| title_short | How Sales Taxes Affect Customer and Firm Behavior: The Role of Search on the Internet |
| title_sort | how sales taxes affect customer and firm behavior the role of search on the internet |
| url | http://hdl.handle.net/1721.1/67872 https://orcid.org/0000-0003-2758-0116 https://orcid.org/0000-0002-1847-4832 |
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