Stand Out from the Millions: Market Congestion and Information Friction on Global E-Commerce Platforms

29.11.2022 12:30 – 13:30

GENEVA TRADE AND DEVELOPMENT WORKSHOP / ABSTRACT

We investigate how market congestion and information friction affect firm dynamics and market efficiency in global e-commerce. Observational data and self-collected quality measures from AliExpress suggest significant demand frictions and potential misallocation in the online market. A randomized experiment that offers new exporters exogenous demand and information shocks demonstrates the limited ability of existing platform mechanisms to help small sellers overcome the demand frictions. We show theoretically and quantitatively that having a large number of market participants undermines the functioning of existing online mechanisms and hinders the discovery of high-quality sellers. Policy counterfactuals highlight that blanket-wide onboarding initiatives can aggravate market congestion, slow down the resolution of the information problem, and result in market misallocation.

Lieu

Bâtiment: IHEID

Graduate Institute
Maison de la Paix
Petal 1, Room S5
2 Chemin Eugène-Rigot
1202 Geneva

entrée libre