SMU SOE Seminar Series (March 30, 2026): E-Commerce Expansion and Regional Disparities: Evidence from Amazon’s Distribution Facilities

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ABSTRACT

This paper studies how e-commerce reshapes the spatial distribution of retail activity, manufacturing, and inter-regional trade. We develop a general-equilibrium model featuring two opposing forces of e-commerce: online search that weakens demand-side agglomeration, and platform logistics that lower trade costs and strengthen supply-side agglomeration. To quantify these forces, we exploit variation from both realized and planned-but-unbuilt Amazon distribution facilities as a quasi-natural experiment. We find that facility expansion causally increases seller entry, sales, and inter-regional trade, with stronger effects for heavy goods and high-transport-cost regions, and positive spillovers to nearby manufacturing employment. A calibrated model shows that Amazon’s expansion between 2012 and 2017 raises average state-level welfare by 8.8 percent but also widens regional disparities in both real income and employment. A horse-race comparison indicates that Amazon's expansion dominates China's import shock after 2007 in explaining spatial distributional changes.