Digital revitalization or useless effort? Public e-commerce support and local specialty sales

Abstract

We examine how a government-initiated e-commerce platform (GEP) affects sales of a local specialty in China’s Pu’er tea market. Using a unique dataset from field experiments and surveys of 983 farmers, we examine changes in online and offline sales over time. We employ two-way fixed effects (TWFE) models to identify the causal impact of GEP access. The results reveal significant substitution effects: access to the GEP increases online sales by 16.649% and decreases offline sales by 15.549%, indicating an overall shift from offline to online sales. On the extensive margin, households that previously sold only offline become more likely to sell online. On the intensive margin, adopters expand their online channels and offer a wider range of tea qualities. The mediation analysis suggests that the increase in online sales channels and product variety accounts for the impact of GEP access on the shift to online transactions.