From the report: "This
paper compares the impact of distance, a standard proxy for trade costs, on
eBay and offline international trade flows. It considers the same set of 62
countries and the same basket of goods for both types of transactions, and
finds the effect of distance to be on average 65 percent smaller on the eBay
online platform than offline. Using interaction variables, this difference is
explained by a reduction of information and trust frictions enabled through
online technology. The analysis estimates the welfare gains from a reduction in
offline frictions to the level prevailing online at 29 percent on average.
Remote countries that are little known, with weak institutions, high levels of
income inequality, inefficient ports, and little internet
penetration benefit the most, as online markets help overcome government and
offline market failure" Read more