Great and Small Walls of China: Distance & Chinese E-Commerce

Alibaba’s Taobao is China’s dominant C2C e-commerce platform. Relying on novel transaction level data from its electronics category, this paper examines the roles of distance as well as seller and buyer experience in Chinese e-commerce. Our estimate of a gravity model shows that the distance elasticity in our data is greater than US C2C e-commerce but smaller than that of South America. In addition, we document greater home bias in China than either of the US or South American Settings. Moreover, by estimating a ‘new-new’ trade model using seller-level transaction data, this paper studies the link between seller experience and distance. Our results show that more experienced sellers tend to sell more and export their goods farther into the marketplace.

Keywords: e-commmerce, China, gravity, distance, domestic trade, Internet marketing

JEL Classification: F10, F14, L86

Suggested Citation: Suggested Citation

Chen, Liang and Johnson, Garrett and Luo, Yao, Great and Small Walls of China: Distance & Chinese E-Commerce (September 30, 2015). NET Institute Working Paper No. 15-14, Available at SSRN: https://ssrn.com/abstract=2672068 or http://dx.doi.org/10.2139/ssrn.2672068