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Top1. Introduction
Traditionally, international trade literature has focused on offline trade flows, mainly international business-to-business or bulk trade. However, with the help of information and communication technologies, international trade has developed beyond the traditional scope. Hence, other new types of transactions, in a more private setting, have become an area worth following. The World Wide Web is becoming the predominant vehicle for accessing and transmitting information globally, and, in the late 20th century, substantial studies sprouted focusing on the influence of the Internet on trade at the macro-level.
In the trade literature, Freund and Weinhold (2004) find a significant effect of the Internet (measured by growth in web hosts in a country) on the growth of goods exports, which is consistent with a theoretical model in which the Internet reduces market-specific fixed trade costs. On overseas e-commerce, Shi (2016) explores the impact of the Internet, indicated by the mutual links data from Chung (2011), on the trade of manufacturing goods, using firm-level customs statistics. Shi constructs detailed firm-volume bilateral trade flows. On exports of services, Freund and Weinhold (2002) show that the development of Internet use in its partner countries has resulted in increased exports of services to the United States. On digital products, Blum and Goldfarb (2006) point out that a gravity model also holds digitally, as physical distance harms the online consumption of taste-dependent digital products, such as music and games, based on a sample of U.S. Internet users. On audiovisual services, Hellmanzik and Schmitz (2015) find that “virtually proximate” countries trade significantly larger amounts of audiovisual services, and virtual proximity has a greater impact on trade in audiovisual services than on total services trade.
Accordingly, the changes in promotion methods have indeed affected consumption habits (Kumar et al, 2006). Since the notable expansions of Amazon and eBay in the 2010s, substantial studies have made efforts to shed light on the influence of online competition on retail business domestically. Naturally, with the development of the Internet and global express network, global free trade is not restrained to digital goods. There are several differences between traditional international trade and new e-commerce. Compared with traditional consignors, e-business suppliers have various options for reducing the distance to their online clients abroad. For example, Gorodnichenko and Talavera (2017) study the pass-through of the exchange rate in online retailers. Cavallo et al. (2014) and DellaVigna and Gentzkow (2017) document the uniform pricing conditions for online and offline retailers separately. Suppliers can also improve the time barriers caused by distance to their clients. They can reduce transit time and delays by offering fast transport modes, such as express delivery, which results in shorter times en route between product order and delivery to the client.
This paper aims to (1) observe the elasticity of other gravity-model determinants by introducing an indicator for Internet development, for instance, the parameter variations of distance, gross domestic product (GDP) per capita, and so forth; and (2) compare the macro and micromechanisms of country heterogeneity for cross-border purchasing behaviors, especially the distribution of consumer choice (i.e., price preference) and the volume of each purchase (i.e., aggregated package value).