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)
Hortaçsu, Ali, F. Asís Martínez-Jerez, and Jason Douglas.
"The Geography of Trade in Online Transactions: Evidence from eBay and MercadoLibre."
American Economic Journal: Microeconomics,
Neoclassical Models of Trade
Size and Spatial Distributions of Regional Economic Activity