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American Economic Journal: Microeconomics: Vol. 1 No. 1 (February 2009)

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The Geography of Trade in Online Transactions: Evidence from eBay and MercadoLibre

Article Citation

Hortaçsu, Ali, F. Asís Martínez-Jerez, and Jason Douglas. 2009. "The Geography of Trade in Online Transactions: Evidence from eBay and MercadoLibre." American Economic Journal: Microeconomics, 1(1): 53-74.

DOI: 10.1257/mic.1.1.53

Abstract

We analyze geographic patterns of trade between individuals 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 to a lesser extent than has been observed in studies of non-Internet commerce between business counterparties. We also find a strong "home bias" for trading with counterparties located in the same city. Further analyses suggest that location-specific goods such as opera tickets, cultural factors, and the possibility of direct contract enforcement in case of breach may be the main reasons behind the same-city bias. (JEL D44, F11, R12)

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Authors

Hortaçsu, Ali (U Chicago)
Martínez-Jerez, F. Asís (Harvard U)
Douglas, Jason (Apple, Inc, Santa Clara, CA)

JEL Classifications

D44: Auctions
F11: Neoclassical Models of Trade
R12: Size and Spatial Distributions of Regional Economic Activity

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