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Internet Technology and the Extensive Margin of Trade: Evidence from eBay in Emerging Economies

Author

Listed:
  • Andreas Lendle
  • Pierre-Louis Vézina

Abstract

Online platforms such as eBay offer technologies that make it easier for firms to export. This paper dissects a new firm-level dataset that covers sales made through eBay by sellers based in 21 emerging economies to provide a new lens through which to look at the effect of trade costs on the extensive margin of trade. Comparing eBay sellers with “offline” firm-level data from the World Bank's Exporter Dynamics Database allows us to test whether the observed trade patterns on eBay fit with the trade-liberalization predictions of heterogeneous-firm models. We find that eBay firms export to more destinations, suggesting low destination-specific fixed costs on eBay. We then show that the distribution of export destinations across eBay sellers is well approximated by a balls-and-bins model of frictionless trade, suggesting eBay indeed lowers fixed export costs. Finally, we compare the gravity of eBay with that of offline trade and find geographic distance, languages, and trade agreements to matter less for online trade.

Suggested Citation

  • Andreas Lendle & Pierre-Louis Vézina, 2015. "Internet Technology and the Extensive Margin of Trade: Evidence from eBay in Emerging Economies," Review of Development Economics, Wiley Blackwell, vol. 19(2), pages 375-386, May.
    • Handle: RePEc:bla:rdevec:v:19:y:2015:i:2:p:375-386
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    File URL: http://hdl.handle.net/10.1111/rode.12148
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    References listed on IDEAS

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    Cited by:

    1. Sally Murray, 2017. "New technologies create opportunities," WIDER Working Paper Series wp-2017-156, World Institute for Development Economic Research (UNU-WIDER).
    2. Jaime DE MELO & Marcelo OLARREAGA, 2017. "Trade Related Institutions and Development," Working Papers P199, FERDI.
    3. Pham Hoang Linh & Nguyen Khanh Doanh & Nguyen Ngoc Quynh, 2019. "Determinants of Vietnam`s potential trade: a case study of agricultural exports to the European Union," Asian Journal of Agriculture and rural Development, Asian Economic and Social Society, vol. 9(1), pages 33-46, June.
    4. Poole Jennifer P. & Volpe Martincus Christian, 2023. "Can Online Platforms Promote Women-Led Exporting Firms?," Journal of Globalization and Development, De Gruyter, vol. 14(2), pages 357-384, December.
    5. Visser, Robin, 2019. "The effect of the internet on the margins of trade," Information Economics and Policy, Elsevier, vol. 46(C), pages 41-54.
    6. Sun, Meng, 2021. "The Internet and SME Participation in Exports," Information Economics and Policy, Elsevier, vol. 57(C).
    7. Sally Murray, 2017. "New technologies create opportunities," WIDER Working Paper Series 156, World Institute for Development Economic Research (UNU-WIDER).
    8. Shuzhong Ma & Xueyao Guo & Hongsheng Zhang, 2021. "New driving force for China’s import growth: Assessing the role of cross‐border e‐commerce," The World Economy, Wiley Blackwell, vol. 44(12), pages 3674-3706, December.

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