Delivery costs and cross-border e-commerce in the EU Digital Single Market

This paper studies the effects of delivery costs on cross-border e-commerce flows in the EU. For this purpose we use both a firm and a consumer surveys carried out 2015, to analyse the supply and demand side separately. The paper first offers some descriptive statistics into the issue of delivery and e-commerce. In addition, the paper provides some indirect and descriptive evidence about the effects of delivery costs on cross-border e-commerce. Finally, more robust econometric analysis are carried out to assess the effects of a hypothetical reduction of delivery costs concerns on cross-border e-commerce in the EU, from both the consumers and firms' perspectives. On the consumers' side, the results indicate that the concern for long delivery times will reduce the expenditure in other countries more strongly if the consumer has had more experience with shopping in non-neighbouring countries. The results on the supply side indicate that removing delivery cost concerns would increase the overall number of firms selling online across the border in 6.2 percentage points. Similarly, an increase of 5 percentage points would be registered in the volume of online trade. Finally, we compute the implied cross-border trade cost reduction due to a hypothetical policy intervention that would eliminate these delivery costs concerns. We plug this trade cost estimate into a macro-sector multi-country CGE model. The macro-economic results indicate that, even though the impact on GDP is tiny, an important effect comes from a reduced overall price level. Consumer prices would be significantly reduced due to a productivity shock in the retail sector.

Authors:

DUCH BROWN Nestor, CARDONA Melisande