Cross-Border Shopping: Evidence from Household Transaction Records

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.