So prices may change more often, but they may be more uniform, which in turn may restrict the ability of prices to reflect idiosyncratic and regional shocks.13 E-commerce changes not only how firms set prices but also how consumers shop. It has revolutionised the transparency of pricing both within and across countries, allowing consumers to easily compare prices and swap one product for another.
This can result in higher demand elasticities, eroding the monopolistic and monopsonistic power of suppliers and reducing mark-ups. Profit margins at Amazon (less than 4%) are much lower than at Walmart (more than 20%). 14 Such a change in demand elasticities and mark-ups can be viewed as a flattening of the Phillips curve.