The Drivers and Impediments for Online Cross-Border Trade in Goods in the EU

Digital Economy Research Programme Working Paper No. 2012/01

38 Pages Posted: 21 Sep 2012 Last revised: 15 May 2013

See all articles by Estrella Gomez-Herrera

Estrella Gomez-Herrera

Joint Research Center of the European Commission

Bertin Martens

Joint Research Centre

Geomina Turlea

European Union - Institute for Prospective Technological Studies (IPTS)

Date Written: September 20, 2012

Abstract

There are no official statistics on international online trade in goods so far. This paper uses a consumer survey to construct a unique matrix of online B2C domestic and cross-border trade in goods between the 27 EU Member States. We compare online and offline trade patterns for similar goods. We find that the standard gravity model performs well in explaining online cross-border trade flows. The model confirms the strong reduction in geographical distance-related trade costs, compared to offline trade. However, the trade costs associated with crossing language barriers increase when moving from offline to online trade. Institutional variables such as online payments facilities and cost-efficiency of parcel delivery systems might play a significant role in cross-border trade and our analysis confirms this. In a linguistically segmented market like the EU, online home market bias remains high compared to bias in offline cross-border trade. We conclude that it is hard to predict at this stage whether regulators could boost online cross-border trade through improvements in legal and financial systems, and parcel delivery infrastructure.

Keywords: online trade, e-commerce, cross-border trade, gravity models, distance, trade costs

JEL Classification: F15, O52

Suggested Citation

Gomez-Herrera, Estrella and Martens, Bertin and Turlea, Geomina, The Drivers and Impediments for Online Cross-Border Trade in Goods in the EU (September 20, 2012). Digital Economy Research Programme Working Paper No. 2012/01, Available at SSRN: https://ssrn.com/abstract=2149426 or http://dx.doi.org/10.2139/ssrn.2149426

Estrella Gomez-Herrera

Joint Research Center of the European Commission ( email )

Via E. Fermi 2749
1049
Belgium

Bertin Martens (Contact Author)

Joint Research Centre ( email )

Edificio Expo, C
Inca Garcilaso, s/n
Sevilla, E-41092
Spain

Geomina Turlea

European Union - Institute for Prospective Technological Studies (IPTS) ( email )

United States

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