ss and if so, how often they used it and were askedfor their online buying history. In total this yields a sample of about 25,000 online users, sixteenpercent of whom report having purchased something online.For each individual that has bought something online, the survey asks how much they havespent (in four groupings: $0-25, $25-100, $100-500, and $500+) for different types of goods suchas books, software, or computers. I use the Forrester imputed values for each spending categoryand sum across the types of goods to approximate the total amount spent online. Using thismeasure, the average amount spent, conditional on buying, is $322. This is similar to existingestimates of average online spending such as Krantz (1998). Although the analysis will be done atthe individual level, for expositional purposes, figure 1 shows the share of Internet users that havepurchased something online in each state. There is decided variation across locations.Matching the purchase data to local sales tax rates requires making some assumptionsbecause the data do not give the actual town name of the respondent. Even if it did, there are asmany as 6400 different sales tax rates across the United States (see Rappaport, 1994) andinformation on them is not kept by the federal government and must be collected at the state andlocal level.I assume, first, that any one living in the main state of the metropolitan area actually livesin the primary city itself. In other words, I assume that a person that reports living in the Chicagometropolitan area and the state of Illinois actually lives in the city of Chicago proper. Thisprevents me from distinguishing between city and suburb within the same state, but is necessary8 The metropolitan areas are actually defined as the television market the respondent lives in. These are generallylarger than the corresponding SMSA. San Francisco, for example, includes the entire bay area.ഊ7given the nature of the data. Since, ...
