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The Value of Reputation in Trade: Evidence from Alibaba

Author

Listed:
  • Maggie X. Chen

    (George Washington University)

  • Min Wu

    (Moody Analytics)

Abstract

We examine the role of an online reputation mechanism in international trade by exploring T-shirt exports on Alibaba. Exploiting rich transaction data and features of search and rating algorithms, we show that exporters displaying a superior reputation perform significantly better than peers with nearly identical true ratings and observables, and the value of reputation rises with the level of information friction and the specificity of information. We develop a dynamic reputation model with heterogeneous cross-country information friction to quantify the effect of the reputation mechanism and find a 20% increase in aggregate exports fueled by a market reallocation towards superstars.

Suggested Citation

  • Maggie X. Chen & Min Wu, 2021. "The Value of Reputation in Trade: Evidence from Alibaba," The Review of Economics and Statistics, MIT Press, vol. 103(5), pages 857-873, December.
    • Handle: RePEc:tpr:restat:v:103:y:2021:i:5:p:857-873
    DOI: 10.1162/rest_a_00932
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    Cited by:

    1. Lin, Boqiang & Teng, Yuqiang, 2024. "Industrial chain division and carbon emission intensity: The moderating effect of digitization," Energy, Elsevier, vol. 286(C).
    2. Louise Guillouet & Amit Khandelwal & Rocco Macchiavello & Madhav Malhotra & Matthieu Teachout, 2021. "Language Barriers in Multinationals and Knowledge Transfers," NBER Working Papers 28807, National Bureau of Economic Research, Inc.
    3. Chen, Qiulin & Xu, Duo & Fu, Hongqiao & Yip, Winnie, 2022. "Distance effects and home bias in patient choice on the Internet: Evidence from an online healthcare platform in China," China Economic Review, Elsevier, vol. 72(C).
    4. Nicolas Lagios & Pierre‐Guillaume Méon, 2024. "Experts, Information, Reviews, and Coordination: Evidence on How Prizes Affect Sales," Journal of Industrial Economics, Wiley Blackwell, vol. 72(1), pages 49-80, March.
    5. Clémence Lenoir & Julien Martin & Isabelle Mejean, 2023. "Search Frictions in International Goods Markets," Journal of the European Economic Association, European Economic Association, vol. 21(1), pages 326-366.
    6. Yu, Wei & Pan, Jianping & Fan, Rui & Yu, Manjiao, 2025. "Government provided credit ratings and foreign sales: Evidence from China," The Quarterly Review of Economics and Finance, Elsevier, vol. 99(C).
    7. ANTWI AGYEI Bright & BOADI Joana Ankobea & NUNOO Linda Ofeibea & MENSAH Cornelius Nii Odoi & AMPEDU Raphael & MANG'ATI Frank Peter & BOAKYE-BOATENG Gifty, 2024. "The Influence of Social Media on Consumer Behavior in Sub-Saharan Africa: An Empirical Evidence from Ghana," International Journal of Research and Innovation in Social Science, International Journal of Research and Innovation in Social Science (IJRISS), vol. 8(8), pages 3102-3121, August.
    8. 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).
    9. Zhang, Lu & Xu, Shiyan & Chen, Jun & Li, Heng & Huo, Jiazhen, 2025. "The impact of ESG ratings on corporate overseas performance: A quasi-experiment based on a staggered DID model," Economic Analysis and Policy, Elsevier, vol. 88(C), pages 1453-1466.
    10. Yuping Deng & Haicheng Wang & Yanrui Wu, 2024. "Public Opinion and Chinese Exports: Evidence from Twitter Sentiment Analysis," Economics Discussion / Working Papers 24-03, The University of Western Australia, Department of Economics.
    11. Ra'ul M'inguez & Asier Minondo, 2024. "The increasing share of low-value transactions in international trade," Papers 2407.15509, arXiv.org, revised Dec 2024.
    12. Fujiy, Brian C. & Khanna, Gaurav & Toma, Hiroshi, 2025. "Cultural proximity and inter-firm trade," European Economic Review, Elsevier, vol. 179(C).
    13. Shen, Guobing & Shen, Binchao & Wu, Ruochen, 2025. "Internetization, supplier search, and diversification of global supply chains," European Economic Review, Elsevier, vol. 172(C).
    14. Yuta Watabe & Han Yang & Eugene Kanasheusuki, 2025. "Can digital distribution defy the law of gravity?," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 58(3), pages 1123-1146, August.
    15. Volpe Martincus, Christian & Sztajerowska, Monika & Santi, Mariana Belén, 2024. "Consumers and Firms in International Trade," IDB Publications (Working Papers) 13558, Inter-American Development Bank.
    16. Yuping Deng & Haicheng Wang & Yanrui Wu, 2026. "Public opinion and Chinese exports: evidence from Twitter sentiment analysis," Journal of the Asia Pacific Economy, Taylor & Francis Journals, vol. 31(1), pages 1-30, January.
    17. Shen, Guobing & Shen, Binchao & Wu, Ruochen & Yuan, Zhengyu, 2023. "Internetization and the markups of export firms: Evidence from China," Economic Modelling, Elsevier, vol. 120(C).
    18. Nicolas Lagios & Pierre-Guillaume Méon, 2021. "Experts, Information, Reviews, and Coordination: Evidence on How Literary Prizes Affect Sales," Working Papers CEB 21-011, ULB -- Universite Libre de Bruxelles.
    19. Xue, Qinyuan & Zhan, Peng & Jin, Yifei & He, Hui, 2024. "Reputation, commitment, and financial market regulation," International Review of Financial Analysis, Elsevier, vol. 96(PB).
    20. Heshu Huang & Yuchen Zou & Liukai Wang & Weiqing Wang & Xiaohong Ren, 2025. "Impact of carbon information disclosure on corporate financing constraints: Evidence from the Carbon Disclosure Project," Australian Journal of Management, Australian School of Business, vol. 50(1), pages 104-131, February.
    21. Wang, Fei & Zhou, Yanping, 2025. "Cross-border E-commerce, platform economy, and export product quality," International Business Review, Elsevier, vol. 34(5).
    22. 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.
    23. Bonfiglioli, Alessandra & Crinò, Rosario & Filomena, Mattia & Gancia, Gino, 2025. "Comparative Advantage in AI-Intensive Industries: Evidence from US Imports," CEPR Discussion Papers 19883, Centre for Economic Policy Research.

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    JEL classification:

    • F1 - International Economics - - Trade

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