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

Author

Listed:
  • 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)

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.

Suggested Citation

  • Jie Bai & Maggie Chen & Daniel Xu, 2018. "Search and Information Frictions on Global E-Commerce Platforms: Evidence from Aliexpress," Working Papers 18-17, NET Institute.
    • Handle: RePEc:net:wpaper:1817
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    Cited by:

    1. Gao, Fujuan & Fenoaltea, Enrico Maria & Zhang, Yi-Cheng, 2023. "Market failure in a new model of platform design with partially informed consumers," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 619(C).
    2. Carballo, Jerónimo & Rodriguez Chatruc, Marisol & Salas Santa, Catalina & Volpe Martincus, Christian, 2022. "Online business platforms and international trade," Journal of International Economics, Elsevier, vol. 137(C).
    3. Lotitto, Estefanía & Díaz de Astarloa, Bernardo, 2023. "The landscape of B2C e-commerce marketplaces in Latin America and the Caribbean," Desarrollo Productivo 48583, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
    4. Jules Depersin & B'ereng`ere Patault, 2023. "Revisiting the effect of search frictions on market concentration," Papers 2303.01824, arXiv.org.
    5. Ladrière, Maxime & Lundquist, Kathryn & Ye, Qing, 2022. "B2B e-commerce marketplaces and MSMES: Evidence of global value chain facilitation?," WTO Staff Working Papers ERSD-2022-7, World Trade Organization (WTO), Economic Research and Statistics Division.

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    More about this item

    Keywords

    e-commerce; asymmetric information; search frictions; firm dynamics;
    All these keywords.

    JEL classification:

    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • L15 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Information and Product Quality
    • L86 - Industrial Organization - - Industry Studies: Services - - - Information and Internet Services; Computer Software
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development

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