The Geography of Trade on eBay and MercadoLibre
University of Chicago - Department of Economics; National Bureau of Economic Research (NBER)
Francisco de Asis Martinez-Jerez
University of Notre Dame - Department of Accountancy
NET Institute Working Paper No. 06-09
We analyze geographic patterns of trade using transactions data from eBay and MercadoLibre, two large online auction sites. We find that distance continues to be an important deterrent to trade between geographically separated buyers and sellers, though at a lesser extent than has been observed in studies of non-Internet commerce. We also find a strong "home bias" towards trading with counterparties located in the same city. Further analyses suggest that cultural factors and the possibility of direct contract enforcement in case of breach are the main reasons behind the same city bias.
Number of Pages in PDF File: 32
Date posted: October 23, 2006