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Analysis of data on Internet activities by US
consumers on non-US websites
Do the trade costs fully account for the effects of
distance on trade?
Methodology
–Introduction– Is physical distance less important when
transportation, time and distribution costs are near
zero?
Relation between trade and digital goods
Methodology Financial transaction: Software, financial information…
Free: Online games, music, pornography….
2 type of
digital Aggregation of digital goods in:
products: Taste-dependent and Non-Taste dependent
Financial
transaction
and Free The analysis will deal with the effect of
distance on taste and non-taste goods
Consumption Theoretically, the Internet reduces the
realized over importance of distance
Data on
internet Internet reduces communication, search
2654 US Internet and transportation costs near zero
users (Shapiro and Varian, 1999) increases trade
(households) from (Freund and Weinhold, 2004) so distance
Dec.27 1999 to should not matter for goods that are
March 31 2000 distributed digitally
Methodology – Choice model for web surfing
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