The Impact of Socioeconomic and Cultural Differences on Online Trade

Abstract

We use eBay data to investigate how trade in the U.S. is influenced by between-state differences in socioeconomic characteristics, tastes, and trust. States’ similarity in cultural characteristics (ethnicity, religiosity, and political behavior) is predictive of online trade patterns. This is partly due to correlation between cultural markers and consumers’ tastes. Consumers are also less likely to trade with dissimilar partners who lack extensive reputations or certification, which suggests that consumers infer seller trustworthiness from cultural similarity. There is no correlation between cultural similarity and buyer satisfaction, however, suggesting that perceived differences in trustworthiness are not validated by actual transactions.

Keywords: gravity model, ecommerce, trust, culture