Influences of the Growth of Internet Shopping on Korea’s Consumer Prices

Generally, internet shopping is known to provide lower prices compared to offline stores because of the reduction of transaction costs by disintermediation and competition of price among online-retailers by rapid spread and acquisition of information. So, the purpose of this study is to positively prove the hypothesis that the growth of internet shopping affects a drop in consumer prices. This study has been used data provided by National Statistical Office: monthly sales data of internet shopping, monthly consumer price index (CPI) and CPIs for 51 commodities which are categorized by the purpose of expenditure, and monthly price data of Dubai crude oil. And this study has been employed the Vector Autoregression model (VAR) with these data guaranteed stationary by unit root tests in order to prove above-mentioned hypothesis. According to the results of analysis, the growth of internet shopping has contributed to decline the consumer price. If sales of internet shopping increase by 10% in a year, then consumer prices will decrease by 0.08% in a year. Also, the prices related commodities having high trading proportions by internet shopping channel have been negatively affected by the growth of internet shopping. Therefore, it is necessary to various policy efforts to develop the industry of internet shopping based on the fact