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
