Online retailers retain clear advantage.

• Position: Taxable Merchandise

Two independent studies use two very different approaches to reach the same conclusion: some online retailers really do have an advantage over traditional brick-and-mortar stores. The studies find evidence from investors, analysts, and consumers themselves that suggest online stores have a competitive edge when they do not have to collect sales tax from shoppers. Both studies were conducted by researchers at the Fisher College of Business at Ohio State University, Columbus.

In one study, Brian Baugh, Itzhak Ben-David, and Hoonsuk Park from the Department of Finance found that sales fell 9.5% at Amazon.com in five states when the online retailer began collecting taxes on purchases. In the other study, Jeffrey Ploopes, assistant professor of accounting, and his colleagues found that the stock prices of online retailers dropped when news broke about possible legislation that would require them to collect sales tax.

Overall, the two studies show that consumers do indeed spend less at online retailers when they have to pay sales tax--and investors are quite aware of the threat these firms face from new tax-collection laws.

The effect was particularly pronounced on larger purchases. Consumers decreased their spending at Amazon by...