Trade Costs and E-commerce in China: the Role of Logistics Firms

Description

E-commerce plays an increasingly important role in our lives, especially during the COVID-19 lockdown. The success of e-commerce is impossible without an efficient logistics network that delivers goods quickly and cheaply. Nevertheless, e-commerce logistics services have not benefited every region equally. The cost of delivering a parcel in Huangnan, a western Chinese city, was almost 20 times higher than in Jinhua, an eastern city, in 2020. Moreover, the e-commerce logistic sector is highly concentrated, with the eight largest firms capturing more than 82% of China's market share in 2020.This project will study the relationship between the market structure of the logistics sector and the inter-regional e-commerce trade cost in China. We will collect data from China's largest logistics platform for e-commerce. Combined with e-commerce trade data and other data published by governments, we aim to uncover new phenomena on logistics, trade cost, and e-commerce in China. We will develop a quantifiable trade model with endogenous trade costs due to imperfect competition between logistics firms. The model will be consistent with the new stylized facts and generate novel predictions about logistics, trade, and the spatial distribution of economic activities. We will then estimate the model and quantify the impact of trade policies and competition policies on trade costs and the welfare gains from e-commerce.