The Impact of Socioeconomic and Cultural Differences on Online Trade

Abstract

We use eBay data to investigate how within-U.S. trade is influenced by differences in socioeconomic characteristics. States’ similarity in cultural characteristics (ethnicity, religious affiliations, and political behavior) predicts online trade; cultural similarity similarly predicts trade within product categories. The culture-trade relationship 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, suggesting that perceived differences in trustworthiness are not validated in actual transactions. This paper was accepted by Alfonso Gambardella, business strategy. Supplemental Material: The data files and online appendix are available at https://doi.org/10.1287/mnsc.2023.4681 .