The effect of geographical distance on online transactions: Evidence from the Netherlands
We find that distance negatively and modestly affects the probability of having a transaction between two regions, and that the distribution of this probability is highly skewed: ranging from a change of 0.000 to -0.008 percentage points per marginal kilometer. The unconditional probability of a transaction is 27 percent. Distance is less influential for:
- advertisements with more photos
- advertisements placed by high-frequency advertisers
- for new goods in comparison to second hand goods.
This suggests that information frictions might be the driving force behind the distance effect on online trade in the Netherlands.