NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH
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The Impact of Socioeconomic and Cultural Differences on Online Trade

Daniel W. Elfenbein, Raymond Fisman, Brian McManus

NBER Working Paper No. 26197
Issued in August 2019
NBER Program(s):Industrial Organization Program, International Trade and Investment Program, Productivity, Innovation, and Entrepreneurship Program

We use U.S. eBay data to investigate how trade is influenced by differences in socioeconomic characteristics, tastes, and trust. States’ similarity in cultural characteristics (ethnicity, religious affiliations, and political behavior) is predictive of online trade; cultural similarity similarly predicts trade between finer (three-digit zip code) geographies. The culture-trade relationship is mediated in part by consumers’ tastes, and is stronger for transactions with sellers who lack extensive reputations or certification, suggesting that consumers infer seller trustworthiness from cultural similarity. There is no correlation between cultural similarity and buyer satisfaction, consistent with perceived differences in trustworthiness not being validated by actual transactions.

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Document Object Identifier (DOI): 10.3386/w26197

 
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