There Goes Gravity: eBay and the Death of Distance

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

Economic Journal, 2016, vol. 126, issue 591, 406-441

Abstract: 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.

Date: 2016
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Persistent link: https://EconPapers.repec.org/RePEc:wly:econjl:v:126:y:2016:i:591:p:406-441

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