Cross-Border Shopping: Evidence from Household Transaction Records

Kluser, Frédéric (31 March 2023). Cross-Border Shopping: Evidence from Household Transaction Records (CRED Research Paper 42). Bern: CRED - Center for Regional Economic Development

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Cross-border shopping allows purchasing comparable goods at lower prices abroad.
At the same time, it can reduce domestic consumption, sales, or tax collection.
During the Covid-19 pandemic, many countries restricted cross-border movements
to mitigate the virus’s spread, thereby also prohibiting cross-border shopping. I
exploit the random timing of the Swiss border closure using data on 600 million
customer-linked transactions from the largest Swiss retailer to identify patterns in
cross-border shopping. I find that grocery expenditures temporarily increased by
10-15% in border regions. Households drive up to 70 minutes to a location across
the border, but the distance decay function is non-linear and marginal costs of
traveling become negligible after 40 minutes.

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