There Goes Gravity: How eBay Reduces Trade Costs

Lendle, Andreas; Olarreaga, Marcelo; Schropp, Simon; Vézina, Pierre‐Louis

doi:10.1596/1813-9450-6253

Cited by 46 publications

(47 citation statements)

References 27 publications

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“…While distance related trade costs diminish substantially, language related trade costs increase when moving from offline B2B to online B2C trade. Lendle et al (2012) come to similar conclusions. f) We can only point out that the observed online border effects in this study are substantially higher than those observed elsewhere in the offline trade literature.…”

supporting

confidence: 59%

“…Several researchers have therefore limited the comparison to differences in the importance of geographical distance. The findings of Hortaçu et al (2009), Lendle et al (2012) and Gomez et al (2013) confirm that the importance of distance is considerably reduced in online trade compared to offline trade, for a similarly composed trade basket. This seems to support the "death of distance" hypothesis.…”

Section: Discussionmentioning

confidence: 84%

“…Hortaçu et al (2009) demonstrate that distance still plays a role in online cross-border trade in goods, though less so than in offline crossborder trade. Lendle et al (2012) using e-Bay data, Gomez et.al (2013) using EU consumer survey data and Cowgill and Dorobantu (2013a) using Google e-commerce data, all come to similar conclusions. Paraphrasing Marc Twain, it seems that rumours about the death of online distance have been greatly exaggerated.…”

Section: Introductionmentioning

confidence: 75%

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Does Online Trade Live Up to the Promise of a Borderless World? Evidence from the EU Digital Single Market

2013

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PrefaceThis report is based on proprietary e-commerce data collected by Google to which the JRC/IPTS has no access. Bo Cowgill has access to the data and, together with Cosmina Dorobantu, did earlier research work on international cross-border e-commerce using these Google data. This was presented at an IPTS seminar on cross-border e-commerce in December 2012 in Brussels. The IPTS subsequently asked both researchers for a specific analysis that focused on online border effects in the EU. The results of that analysis are presented in this report and were discussed at a seminar at the IPTS in Seville in June 2013.The econometric analysis in Sections 2 and 3 of this report as well as the appendixes were produced for the JRC/IPTS by Bo Cowgill (UC Berkeley) and Cosmina Dorobantu (Oxford University) under Letters of Appointment nrs 153469-2013 and 153449-2013 respectively, which allocated a period of up to ten working days to each of them to carry out this assignment. The abstract, the introduction in Section 1 and the discussion in section 4 were written by Bertin Martens. 2 AbstractAn important EU Digital Single Market policy objective is to achieve an open and integrated market for online e-commerce in the EU, to make it easy for consumers to go outside their domestic market and shop online in other EU Member States. This study applies a standard gravity model of international trade to Google e-commerce data to estimate the prevalence of home bias in online shopping in the EU. It compares how much EU Member States trade domestically and with other Member States, and how much the EU trades with itself and with the rest of the world. The research confirms the findings of the (offline) international trade literature, according to which there is strong home bias. There is no unambiguous evidence about the strengths or weaknesses of the EU Digital Single Market. Strong intra-EU home bias suggests that online consumers have a tendency to stay in their home country market. Equally strong extra-EU home bias suggests that online consumers who do decide to shop abroad have a tendency to stay in the EU however, rather than going to a non-EU country. There are indications that online home bias is lower in a comparable cross-border trade setting in North America. Data and methodological limitations do not allow a more detailed analysis. JEL codes: F15, O523 Introduction 1With the rise of the internet the cost of transmitting information has dramatically declined to almost nothing and any content is instantly accessible. This has led to the "death of distance" (Cairncross, 1997) hypothesis, the idea that distance has become irrelevant in anything that can be communicated across the internet. However, previous research has shown that this is not necessarily the case. Blum & Goldfarb (2006) showed that internet traffic density is still subject to the gravity law. Internet users do not venture far beyond their familiar cultural environment and geographical distance counts in the search for taste and culture sensitive services. T...

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supporting

confidence: 59%

Section: Discussionmentioning

confidence: 84%

Section: Introductionmentioning

confidence: 75%

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Does Online Trade Live Up to the Promise of a Borderless World? Evidence from the EU Digital Single Market

2013

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“…There may also be a cultural similarity element -Blum and Goldfarb (2006) found Americans were more likely to visit websites from nearby countries when looking at products such as music and games (deemed taste-dependent), while visits to websites for non-tastedependent products such as software were not affected by distance. 33 Still, proximity appears less of an issue for online transactions than offline - Lendle et al (2012) compared cross-border transactions on eBay and comparable offline transactions and found that the importance of distance between trading partners was 65% smaller on eBay. They suggested technology can reduce frictions related to trust and information issues and found significant real income gains could be achieved if search costs could be reduced to the level of online trading.…”

Section: E2 Providing a Platformmentioning

confidence: 99%

Economic and Social Benefits of Internet Openness

2016

OECD Digital Economy Papers

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“…15 Choi (2010) also finds that internet stimulates service trade using a larger sample of countries and a longer time series. Blum and Goldfarb (2006) conclude that gravity holds in the case of digital products consumed over the internet without trading costs based on their analysis of internet activities in a sample of US households,whereas Lendle et al (2012) show that the effect of distance -as proxy for trade costs-is smaller on eBay than on traditional offline trade. 16 Timmis (2013) reports that internet access favors direct trade but has no discernible effect on intermediated trade using data from the World Bank's Enterprise Surveys.…”

Section: It Is Still An Open Question What Role Information Technologmentioning

confidence: 99%

The Border Labyrinth: Information Technologies and Trade in the Presence of Multiple Agencies

Carballo¹,

Graziano²,

Schaur³

et al. 2016

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work is licensed under a Creative Commons IGO 3.0 AttributionNonCommercial-NoDerivatives (CC-IGO BY-NC-ND 3.0 IGO) license (http://creativecommons.org/licenses/by-nc-nd/3.0/igo/ legalcode) and may be reproduced with attribution to the IDB and for any non-commercial purpose, as provided below. No derivative work is allowed.Any dispute related to the use of the works of the IDB that cannot be settled amicably shall be submitted to arbitration pursuant to the UNCITRAL rules. The use of the IDB's name for any purpose other than for attribution, and the use of IDB's logo shall be subject to a separate written license agreement between the IDB and the user and is not authorized as part of this CC-IGO license.Following a peer review process, and with previous written consent by the Inter-American Development Bank (IDB), a revised version of this work may also be reproduced in any academic journal, including those indexed by the American Economic Association's EconLit, provided that the IDB is credited and that the author(s) receive no income from the publication. Therefore, the restriction to receive income from such publication shall only extend to the publication's author(s). With regard to such restriction, in case of any inconsistency between the Creative Commons IGO 3.0 Attribution-NonCommercial-NoDerivatives license and these statements, the latter shall prevail.Note that link provided above includes additional terms and conditions of the license.The opinions expressed in this publication are those of the authors and do not necessarily reflect the views of the Inter-American Development Bank, its Board of Directors, or the countries they represent.http://www.iadb.org [2016] The More precisely, this paper investigates whether and how changes in the technology available for submitting, processing and sharing data to comply with border regulations affects trade. In particular, we take advantage of Costa Rica's gradual policy driven change from a paper-based to an electronic trade single window that allows for streamlined administrative procedures to obtain product-specific authorizations required to export to identify the impact of information technologies on firms' exports. 1We carry out difference-in-differences estimations on highly disaggregated firm-level export data from Costa Rica over the period 2007-2013 that distinguish whether shipments' required documentation was processed manually and separately with each intervening agency -even when potentially presented at a single physical entry point-or electronically in a simultaneous manner for all relevant agencies. Our results indicate that the introduction of an electronic single window that simplified administrative procedures has been associated with an increase in exports from firms whose products require permits.Such increase in exports can be traced back to higher shipping frequency, buyer diversification, and greater sales per buyer. This effect has been stronger for firms that have to interact with several public 1 More specifically, Costa Rica imple...

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There Goes Gravity: How eBay Reduces Trade Costs

Cited by 46 publications

References 27 publications

Does Online Trade Live Up to the Promise of a Borderless World? Evidence from the EU Digital Single Market

Does Online Trade Live Up to the Promise of a Borderless World? Evidence from the EU Digital Single Market

Economic and Social Benefits of Internet Openness

The Border Labyrinth: Information Technologies and Trade in the Presence of Multiple Agencies

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