There goes gravity: eBay and the death of distance

TY - JOUR

T1 - There goes gravity

T2 - eBay and the death of distance

AU - Lendle, Andreas

AU - Olarreaga, Marcelo

AU - Schropp, Simon

AU - Vezina, Pierre-Louis

PY - 2016/3/1

Y1 - 2016/3/1

N2 - We compare the effect of geographic distance on eBay and total international trade flows. We consider the same 61 countries and basket of goods for both types of transactions. We find the effect of distance to be on average 65% smaller on eBay. We argue this difference is due to a reduction in search costs; it increases with product differentiation and is higher when trade partners speak different languages, when corruption in the exporting country is high and when uncertainty avoidance is high in the importing country. Moreover, eBay's seller-rating technology further reduces the distance effect on eBay.

AB - We compare the effect of geographic distance on eBay and total international trade flows. We consider the same 61 countries and basket of goods for both types of transactions. We find the effect of distance to be on average 65% smaller on eBay. We argue this difference is due to a reduction in search costs; it increases with product differentiation and is higher when trade partners speak different languages, when corruption in the exporting country is high and when uncertainty avoidance is high in the importing country. Moreover, eBay's seller-rating technology further reduces the distance effect on eBay.

U2 - 10.1111/ecoj.12286

DO - 10.1111/ecoj.12286

M3 - Article

SN - 0013-0133

VL - 126

SP - 406

EP - 441

JO - Economic Journal

JF - Economic Journal

IS - 591

ER -