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Search and Information Frictions on Global E-Commerce Platforms: Evidence from Aliexpress

Jie Bai (), Maggie Chen () and Daniel Xu ()
Additional contact information
Jie Bai: Harvard Kennedy School, 79 JFK Street, Cambridge, MA 02138
Maggie Chen: George Washington University, Monroe Hall, 2115 G St. NW, Washington, District of Columbia 20052
Daniel Xu: Duke University, 220 Social Sciences Bldg, Box 90097, Durham, NC 27708

No 18-17, Working Papers from NET Institute

Abstract: Global e-commerce platforms provide a promising avenue that connects sellers and buyers from different parts of the world. In this project, we begin by documenting a few new stylized facts about exporter dynamics on global e-commerce platforms using data from Aliexpress. These facts indicate substantial search and information frictions in this market, due to the large number of market participants and significant ex-ante heterogeneity in quality. These imply that initial demand shocks could have a persistent impact on growth and performance can be quite path-dependent. Motivated by by the empirical facts, we design an experiment where we randomly generate demand and information shocks to a set of small perspective exporters via randomly placed orders and reviews. We follow all sellers for 3 months and collect a rich set of firm performance and quality data to estimate the extent of search and information frictions. Our findings suggest that initial demand shocks significantly boost subsequent sales among the treated sellers. Information on product quality seems to matter more compared to information on shipping quality, suggesting that the former may be the major type of asymmetric information between the two sides of the market. We further explore other potential determinants of growth and heterogeneity in the treatment effect.

Keywords: e-commerce; asymmetric information; search frictions; firm dynamics (search for similar items in EconPapers)
JEL-codes: D83 L15 L86 F14 O12 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-exp
Date: 2018-10
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