Sai Chand Chintala is finishing his Ph.D in Marketing at S.C. Johnson College of Business, Cornell University and accepted an offer to join as faculty at Singapore Management University. Detailed profile can be found HERE.
PhD Scholar of Marketing at S.C. Johnson College of Business, Cornell University.
January 10, 2025
Local Bias in Global Platforms: Evidence from a Cross-Market Merger
As digital platforms expand globally, understanding heterogeneous local market preferences becomes essential for optimizing market integration strategies. The rapid growth of the“Global Localization” industry highlights the increasing demand for companies to tailor their content and products to resonate with local audiences. Thispaper examines the impact of international cross-market integration on consumer behavior within a major global Consumer-to-Consumer (C2C) online marketplace,which merged neighboring geographic markets.
We focus on a specific merger case between two markets characterized by asymmetrical market sizes and income levels. We Leverage this quasi-exogenous change in market thickness to evaluate the effects of this merger on key platform outcomes such as prices and volume of transactions, utilizing language-agnostic embeddings to identify similar items within and across markets with different languages. We find that despite the substantial increase in market efficiency due to the merger—evidenced by a reduction in price differences from 46% to 19% between the two markets—thereremains a strong preference for local trade, which we term “local bias.” Local Bias is in part explained by localized and idiosyncratic consumer preferences for various products across different markets. The perceived degree of commoditization of items within categories predicts the extent of local bias. We investigate other potential underlying mechanisms of this persistent local bias, providing insights into the complexities of market integration strategies and their implications for digital platforms.
