When several US states passed laws to require the collection of sales tax on online purchases, households living in these states reduced their Amazon expenditures by 9.5%. In practice, only Amazon was affected by the tax.
The decline in Amazon purchases is offset by a 2% increase in purchases at local brick-and-mortar retailers and a 19.8% increase in purchases through the online operations of competing retailers. The decline in sales is sharpest (23%) for purchases above $300.
Online consumers are very sensitive to total prices, taxes and options to avoid taxes.
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