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Income Mobility and Distribution in E-Commerce: The Case of eBay Sellers

May 09, 2016

Professor Erik Brynjolfsson (MIT IDE), Dr. Sagit Bar-Gill (MIT IDE), Dr. Peter Coles (eBay), and Nir Hak (Harvard)

We explore the dynamics of sellers in the eBay marketplace, studying trends in sellers’ income distribution, and individual level mobility. We find that in the past decade income inequality has been rising on eBay, as the Gini coefficient for professional sellers’ revenue has been monotonically increasing. We further find that seller revenue exhibits a Power Law distribution, and that the tail of high earners has become heavier over the past decade. The documented increase in inequality is thus driven by top sellers that are commanding a growing share of total income on eBay. This reflects a pattern that has received much attention in the context of individual income dynamics. We then move from distribution level analysis to study success and mobility drivers at the individual level. We find that sellers with very diverse offerings or else very specialized offerings are most likely to experience growth, and that upward mobility has increased over time. This ongoing project will further examine the role of IT tools provided by the eBay platform on mobility levels, for sellers with different volumes of operations. The study will include several experiments conducted in collaboration with eBay. Since eBay serves a spectrum of small and large sellers, this research will shed light on overall trends in income distribution and mobility in e-commerce.