Abstract

What are the economic impacts of the online judicial auction when it leverages the benefits of a prominent e-commerce platform? Drawing on a policy experiment where local courts auction assets subjected to litigation in the largest e-commerce platform in China, this paper documents that, compared with the in-person or local-trading-website mode of auctions, the e-commerce mode is significantly associated with a larger proportion of low-value and diverse items being sold and an increase in efficiency. Linking the judicial auction records with the Business Registration Database, this paper establishes that the e-commerce mode facilitates the exit of inefficient businesses and encourages related shareholders' later investment. Evidence also suggests that the adoption of the e-commerce mode can be driven by the bankruptcy workload of local courts.