Can Online Markets Make Trade More Inclusive?

Lendle, Andreas;
Mar 2014
Technology made available by online markets has signifcantly reducedthe cost of entry into international markets for small and medium sized
firms, who can now reach far away consumers and create global reputa-
tion as a seller at very low costs. Empirical evidence using data from
eBay sellers shows that a large share of online firms exports, even though they are on average much smaller than traditional offline firms. We show that in a world where income inequality is driven by an uneven distribution of capital rents, online markets help to reduce income inequality by providing smaller firms access to international markets.