Do Countercyclical-Weekend Effects Persist in Online Retail Markets?

Contrary to classical economic price theory, Warner and Barsky [Warner, Elizabeth J., and Barsky, Robert B. The timing and magnitude of retail store markdowns: Evidence from weekends and holidays. Quarterly Journal of Economics, 110, 2, 1995, 321–352.] show that in traditional off-line markets, prices on average tend to be lower on weekends despite higher aggregate demand. Their explanation for this effect is rooted in the existence of consumers’ search and transportation costs. We argue that since these costs are significantly reduced in many online retail market environments, this ‘‘weekend effect” should be weakened substantially. Our empirical evidence suggests that in fact, there are few statistically significant day-ofthe-week price differences in the online markets we study, and the estimated magnitude of these differences is quite small.