Economical Research Journal, 2022, Issue 8

Authors: Yue Lu, Junjie Hong, Yongchang Chen, Kailin Gao

Abstract: Connecting domestic and international markets and the respective resources is the key to China's new double-thrust development dynamic with the domestic economy as the mainstay and international engagement as the support. E-commerce platforms enable firms to effectively reach both markets. In recent years, using multiple domestic and international e-commerce platforms has become more prevalent, driving China's high-quality growth. However, how can e-commerce platforms affect export? Will multi-platform firms experience a larger driving effect on firm export? The answers to these questions will provide important theoretical support for how digital economy can promote the high-quality development of China's foreign trade and shed light on how to capitalize on domestic and international markets and domestic and foreign resources under the new development pattern. Based on Marc Melitz's heterogeneous firm theory, this paper establishes a theoretical model to study the impact of dual e-commerce platforms on firm exports. Based on 2002 – 2016 data from 1688.com, Alibaba.com and China Customs Statistics, this paper explores the impact and internal mechanism of joining dual e-commerce platforms ( 1688.com and Alibaba.com) on firm export from both theoretical and empirical perspectives. The main findings of this paper are as follows. First, the export promotion effect brought by e-commerce platforms exhibits a significant sorting pattern: dual e-commerce platform ＞ alibaba.com ＞ 1688.com, that is, joining 1688.com or Alibaba.com significantly promotes firm export, and more importantly, dual-platform firms show the strongest export promotion effect. We verify the theoretical model through an empirical study.  This is the first exploratory study on the advantages of dual e-commerce platforms. Second, the scale effect and the intermediate product effect are two important channels through which e-commerce platforms affect firm exports. The two effects also exhibit the same sorting pattern. Firms joining dual e-commerce platforms can fully utilize domestic and international markets and the respective resources, and thus their scale effect and the intermediate product effect are stronger than those of single-platform firms. Third, firms located in the central and western regions of China and local enterprises enjoy a stronger export promotion effect. The contributions of this paper are three-fold. First, this paper constructs a theoretical model to explore how dual e-commerce platforms affect firm exports; and it proposes two mechanisms, namely, the scale effect and the intermediate product effect, to explain how e-commerce platforms affect firm export. Second, this paper obtains data from 1688.com and Alibaba.com, the largest domestic and international B2B e-commerce platforms respectively, forming a massive and innovative micro e-commerce firm-level dataset. Third, this paper examines the differences in export promotion effects between dual e-commerce platforms and single e-commerce platforms, further verifies the scale effect and the intermediate product effect, and investigates the heterogeneous effect of e-commerce platforms on firm exports from the perspectives of geographical location and firm type. Developing digital economy is essential for promoting the new dual circulation development Pattern. As an important part of digital economy, e-commerce has injected new momentum into the construction of the new development Pattern. The policy implications of this paper are as follows. First, it is necessary to actively support the internationalization of local enterprises, encourage enterprises to develop online trade and sales channels, and utilize both domestic and international markets and the respective resources to achieve higher-level export growth. Second, it is important to encourage relevant departments and industry associations to provide industry and market-related information for firms, reducing the information asymmetry problems facing firms when they are searching for customers or suppliers. Third, it is important to play the important role of e-commerce on China's coordinated development and create convenience for firms located in central and western regions in China to utilize e-commerce platforms. Fourth, China needs to actively participate in and lead the formulation of international digital trade rules, give full play to the unique advantages of e-commerce in connecting both ends of supply and demand, and domestic and foreign markets, thus accelerating the construction of the new dual circulation development Pattern and promoting high-quality development．

Keywords: Dual E-commerce Platform; New Development Paradigm; Domestic and International Markets; Firm Export