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Does the internet defy the law of gravity? [An article from: Journal of International Economics]
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Book Details
Author(s)
B.S. Blum, A. Goldfarb
Publisher
Elsevier
ISBN / ASIN
B000PC0AOE
ISBN-13
978B000PC0AO2
Marketplace
France 🇫🇷
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Description
This digital document is a journal article from Journal of International Economics, published by Elsevier in 2006. The article is delivered in HTML format and is available in your Amazon.com Media Library immediately after purchase. You can view it with any web browser.
Description:
We show that gravity holds in the case of digital goods consumed over the Internet that have no trading costs. Therefore trade costs cannot fully account for the effects of distance on trade. In particular, we show that Americans are more likely to visit websites from nearby countries, even controlling for language, income, immigrant stock, etc. Furthermore, we show that this effect only holds for taste-dependent digital products, such as music, games, and pornography. For these, a 1% increase in physical distance reduces website visits by 3.25%. For non-taste-dependent products, such as software, distance has no statistical effect.
Description:
We show that gravity holds in the case of digital goods consumed over the Internet that have no trading costs. Therefore trade costs cannot fully account for the effects of distance on trade. In particular, we show that Americans are more likely to visit websites from nearby countries, even controlling for language, income, immigrant stock, etc. Furthermore, we show that this effect only holds for taste-dependent digital products, such as music, games, and pornography. For these, a 1% increase in physical distance reduces website visits by 3.25%. For non-taste-dependent products, such as software, distance has no statistical effect.
