The impact of price adjustment costs on price dispersion in e-commerce

•Using panel data from a price comparison website, we use several indicators of firms’ price adjustment costs (PAC) to analyze their effect on price dispersion (PD).•We find considerable PD in e-commerce markets where PD and PAC are expected to be low.•We use a rich set of variables to test alternative hypotheses that could influence PD.•We also find less PD for products with greater demand and for products which are offered by a smaller number of retailers.•We find no evidence that price dispersion is a disequilibrium phenomenon that disappears over time.