The Effects of Government Licensing on E-commerce: Evidence from Alibaba

Ginger Zhe Jin, Zhentong Lu, Xiaolu Zhou and Chunxiao Li

No 27884, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Using proprietary data from Alibaba, we examine how the 2015 Food Safety Law (FSL) affects e-commerce in China. The FSL requires most food sellers on e-commerce platforms to obtain a valid, online license for retail food handling. Because the FSL was rolled out progressively, we have a rare opportunity to observe a gradual transition from voluntary certification to partial licensing and mandatory licensing. Data summary shows that, conditional on sellers with valid licensing information, those that had a better online reputation and more online food sales before FSL tend to display their FSL license earlier on the platform, and buyers are more willing to transact with a seller after she displays her FSL license. To identify the causal impact of the FSL, we compare food and non-food categories via synthetic control matching. We find the average quality of surviving food sellers has improved after partial and mandatory licensing, partly because those who are unwilling to obtain the FSL license must exit the platform. Despite an increase in seller concentration, the platform's gross merchandise value (GMV) in the food category did not decline post FSL, nor did the average sales price increase significantly one year into full enforcement of the FSL.

JEL-codes: D82 K23 L5 L81 (search for similar items in EconPapers)
Date: 2020-10
New Economics Papers: this item is included in nep-com, nep-law and nep-pay
Note: IO
References: Add references at CitEc
Citations: View citations in EconPapers (1)

Published as Ginger Zhe Jin & Zhentong Lu & Xiaolu Zhou & Chunxiao Li, 2022. "The Effects of Government Licensing on E-commerce: Evidence from Alibaba," The Journal of Law and Economics, vol 65(S1), pages S191-S221.

Downloads: (external link)
http://www.nber.org/papers/w27884.pdf (application/pdf)

Related works:
Working Paper: The Effects of Government Licensing on E-commerce: Evidence from Alibaba (2021)
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:nbr:nberwo:27884

Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w27884

Access Statistics for this paper

More papers in NBER Working Papers from National Bureau of Economic Research, Inc National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.. Contact information at EDIRC.
Bibliographic data for series maintained by ().