There goes gravity: how eBay reduces trade costs

Andreas Lendle, Marcelo Olarreaga, Simon Schropp and Pierre-Louis Vézina

No 6253, Policy Research Working Paper Series from The World Bank

Abstract: This paper compares the impact of distance, a standard proxy for trade costs, on eBay and offline international trade flows. It considers the same set of 62 countries and the same basket of goods for both types of transactions, and finds the effect of distance to be on average 65 percent smaller on the eBay online platform than offline. Using interaction variables, this difference is explained by a reduction of information and trust frictions enabled through online technology. The analysis estimates the welfare gains from a reduction in offline frictions to the level prevailing online at 29 percent on average. Remote countries that are little known, with weak institutions, high levels of income inequality, inefficient ports, and little internet penetration benefit the most, as online markets help overcome government and offline market failures.

Keywords: Economic Theory&Research; Common Carriers Industry; Free Trade; E-Business; Trade Law (search for similar items in EconPapers)
Date: 2012-10-01
New Economics Papers: this item is included in nep-ict and nep-int
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (29)

Downloads: (external link)
http://www-wds.worldbank.org/external/default/WDSC ... ered/PDF/wps6253.pdf (application/pdf)

Related works:
Working Paper: There Goes Gravity: How eBay Reduces Trade Costs (2012)
Working Paper: There goes gravity: how eBay reduces trade costs (2012)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:wbk:wbrwps:6253

Access Statistics for this paper

More papers in Policy Research Working Paper Series from The World Bank 1818 H Street, N.W., Washington, DC 20433. Contact information at EDIRC.
Bibliographic data for series maintained by Roula I. Yazigi ().