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The Online Auction Market in China - A Comparative Study

between Taobao and eBay
Zhangxi Lin
The Rawls College of Business Administration
Texas Tech University
Lubbock, TX 79409-2101, USA
Tel: +1-806-742-1926, Fax: +1-806-742-3193
Email: zlin@ba.ttu.edu

Jun Li
Shanghai University of Finance and Economics
Shanghai, China
Tel: +86-21-6590-4295, Fax: +86-21Email: lijun-embajada@163.com
potential risk to online traders [1],

ABSTRACT

reputation systems available in eBay, Yahoo auction, Amazon and

The success of the online consumer-to-consumer auction is largely

more other online auction marketplaces have contributed

owing to the widely accepted online reputation system. In

significantly to the success. An online reputation system allows

particular, studying the fast growing online auction markets in

traders to rate each other a positive, negative or neutral point after

China, a country with the largest population in the world, will

a transaction. This is then added up to their reputation records that

provide the important outcomes in revealing the trend of global

electronic

market.

Encouraged

by the

previous

the prevailing online

are available to future traders as the quantitative indicator of the

research

traders online reputation. In addition, traders can leave comments

achievement on eBays online reputation system, this paper is

to their trading partners, which will be referred by traders further

intended to report the research findings on the online auction

when needed.

market in China using the online reputation data collected from

Taobao - a Chinese version of online auction marketplace. By

The prevailing acceptance and effective operation of online

comparing between the data from Taobao and eBay we found that

reputation system in online C2C auction market have triggered

the distribution of Chinese online traders 6-month reputation

wide research interests. The interesting thing is that the research

scores is lognormal; both negative feedback rates and neutral

focus of online reputation shifted in accordance with the growth

feedback rates of Taobaos reputation data are also lognormally

and acceptance of electronic market. Before year 2000, online

distributed the same as that of eBay These are the same as the

reputation research is mainly related to online trust as an important

reputation score distributions in eBay. However, the higher neutral

angle contributing to the e-commerce research when e-market was

scores in Taobao indicate the difference in the cultural aspect

just emerging with huge potentials (e.g. [3]). Later on, as the

contrasting to that of eBay.

online stores became successful, the research interest was turned

to the seller side problems, typically, the effect of reputation scores

Keywords

on the price, such as the sixteen representative research projects in

Reputation; consumer-to-consumer auction; electronic commerce;

this aspect reviewed in [14]. Later, some research effort has moved

market structure; lognormal distribution

back to the buyer side problems with the focus on the adoption of
trusted third party services. For example, Antony et al [2] conduct

1.

an empirical study on the determinants of online escrow service

INTRODUCTION

Powered by eBays success, online consumer-to-consumer (C2C)

adoption including online reputation scores. In this research strand

auction as a major e-commerce form has quickly diffused to all

the effect of traders perceived risk is identified as an important

over the world in last few years. The great achievement of C2C

determinant in electronic market for purchasing items and

electronic commerce is largely owing to the services of various

adopting trusted third parties service, and perceived risk is subject

trust-building systems. In particular, as the asymmetry of

to change with regard to each trading partners online reputation.

information in online marketplaces is the main cause of the

Since 2004, Lin et al [12] started to investigate the relationship

between online reputation and market structure a traditional

The unique infrastructure of e-commerce in China, particularly the

economics research issue in industrial organization field. They

online C2C and business-to-consumer (B2C) market, has been

treated the total reputation score of online sellers as the market

shaped and dominated by three major leaders yet competitors in

capacity of firms and revealed that the online reputation scores

the online auction market:

were lognormally distributed, complying to the Gibrat Law well

eBayEachnet, a wholly-owned subsidiary of eBay;

[7].

1pai, a joint-venture company between Yahoo and the

Chinese portal company Sina; and

Encouraged by the abovementioned research achievement, this

paper is intended to investigate the online auction market in China,

Taobao, a joint-venture marketplace owned by Alibaba

and Softbank.

a nation with the largest population in the world and rapidly

Among the three major players, eBayEachnet and Taobao are

growing Internet population. Right now, e-commerce as a global

about the similar size and lead the online auction market, and 1pai

business trend has also got popular in China, with profound

is at the third place. The following are more detailed introduction

influences in both society and economy, as China has been

to the three e-commerce companies.

experiencing fast growth in economy in the last quarter of the

century. Specifically, we are to examine the online reputation

1) EBayEachnet (http://www.ebay.com.cn)

distribution in Taobao.com a Chinese version of online auction

Shanghai-based EachNet was started in 1999 by two Chinese

marketplace using the data from its reputation system. We

Harvard graduates. In 2004, EachNet claimed to have more than

compare between the data analysis outcomes from Taobao and

10 million users with the transactions of 3 billion yuan (about

eBay with regard to a number of outstanding issues in the online

US$360 million) in merchandise. eBay acquired one third of

reputation system literature.

shares of EachNet in 2002. In 2004 eBay paid US$150 million to

2. ONLINE C2C AUCTION IN CHINA

finally take over EachNet. Since the continual investment in

2.1 An Overview of Chinas Online Auction Market

technology platforms and marketing is draining its profitability,

eBayEachnet remained unprofitable, although it has been

According to the semi-annual survey conducted by CNNIC (China

experiencing a fast growth in both the trader population and the

Internet Network Information Center, http://www.cnnic.net.cn/),

total transaction volume.

the population of Internet users in China has reached 87 million in

July 2004 and the figure jumped to 94 million a half year later.

2) 1pai (http://cn.auctions.yahoo.com)

With the phenomenal growth rate of the online users, the

After the debut made in March 2004, 1pai has experienced

development of the E-commerce market has galloped

phenomenal growth with the following months, featured by more

simultaneously (Figure 1).

than 700,000 items transacted in every single day.

Supported by

the source of more than 100 million registered users gathered by

Sina and the experienced managerial team dispatched by Yahoo,
the online auction marketplace has been completed by merely a
quarter of a year. In the consideration of the security for the
payment system, 1pai has launched the counterpart to the eBays
Paypal, named as 1 pai tong, meaning One payment for all.
During the fierce struggle between eBayEachnet and Taobao, 1pai
just quietly improves its online auction platform and service
support strategy.
3) Taobao (http://www.taobao.com)

Figure 1. E-Commerce Growth in China

Invested by the largest business-to-business e-commerce company

The following are a few recent most important events about

in China Alibaba, Taobao (www.taobao.com) was founded in

Taobao:

July 2003. The name "Taobao" has a strong cultural meaning, as is

interpreted as treasure rush, based upon the fictional characters

On November 12, 2004 Alibaba started to negotiate with

Microsoft on cooperation in the online auction business;

in Chinese historical novels.

Before Taobao launched in the summer of 2003, eBay was the

On December 15, 2004, Taobao and film maker Huayi

Brothers reached the agreement on setting up a special

only player in Chinas online C2C market. However, Taobao fast

zone on Taobaos website for Huayi Brothers new film

grew from about 9% of the online auction market share in China in

Tian Xia Wu Zei (The World Without Thieves). Many

the first quarter of 2004 to 41% by the fourth quarter of the same

items used in filming the movie are auctioned on

year. According to recent Alexa report (http://www.alexa.com),

Taobao's. According to Taobao, the most popular film

Taobao is ranked the 23rd most popular website in the world,

related items have received up to 10,000 hits.

ahead of all e-commerce sites in China. For providing a vivid view

of the magic development, we collect two histograms to fulfill the

demonstration, shown in Figure 2.

On March 3, 2005, Taobao announced that the company

will partner with Industrial and Commercial Bank of
China to promote Alibaba's third party payment platform
Zhi Fu Bao to Chinese e-commerce websites.

The online payment system is undoubtedly the key of Taobaos

innovation, which is titled Alipai (also named in Chinese zhi fu
bao meaning A valuable payment system) established for the
integration of the incisive analysis of the deficiency of the
conventional wisdom. It is supposed to have resolved the payment
problems that is typically significant in China, such as Buyer
does not want to send money before seeing the goods; seller does
not want to ship the goods before receiving money.
Figure 2. Taobaos Growing Market Value

Alipai is proved to be rewarding for it is responsible for 79% of

listings on Taobao. Compared to 21% of listings on eBayEachnet

(Source: iResearch Inc., China Online Auction Report 2004)

transacted via its counterpart, Alipai intrigues the public why the
payment system is so successful on Taobao. The report published
in April 2004 announced that the growth rate of 768% at Taobao
was greater than that of any other domestic website in China.
Meanwhile, Taobao is also featured by its No.1 place of other
important indexes indicating the quality of the online individual
transaction. For instance, the success of the transaction rate locates
the top of the list, and nearly quadrupled within twelve months.
Nowadays, the real online quantity of the commodity in Taobao
has reached nearly 2 million.
In general, Chinas online auction market can be characterized as

Figure 3. Taobaos User Population Growth

the follows:

(Source: iResearch Inc., China Online Auction Report 2004)

Low penetration of C2C e-commerce at present - only

about 12% of them are regular online shoppers (vs.

2.2 The Reputation System on Taobao

30%+ in the US) with a rapid growth of e-commerce

Taobaos reputation system is the most popular and successful one

market

in China. Although it is similar to that of eBay, we can tell the

Localization of market service e.g. targeting at

differences from Figure 4 that Taobao differentiates its reputation

individual consumers, Taobao poises its marketplace in

information from eBays reputation forum by classifying the

Chinese cultural sensibilities to foster a strong user

reputation scores into buying and selling. This makes the

community.

reputation report more informative. A trading partner can justify

the trading risk using different types of reputation statistics

The above shows that the online auction market in China has huge

information with regard to the traders role in a specific

potential and the difference in culture background and social

transaction.

structure will call for further research to provide insightful

guidelines to the market evolution.

Figure 4a. Taobao reputation forum

Figure 4b. eBays reputation forum (This is the format since January 1, 2004)
In general, reputation systems help manage risks and promote

there is no negative feedback [3], and a negative reputation score

cooperation. A strong positive reputation score reduces buyers

has a greater impact on the ability of sellers to sell their products

risk perception and enhances their trust perception only when

at higher prices than a positive reputation [18]. A seller with a

higher negative reputation score is forced to sell his products at a

collected 200 sellers records (the dataset is denoted as TB050227)

lower price than will a seller with a lower negative reputation

compared with the 408 records of the same type of data (S-030116)

score [18]. Potential buyers are more sensitive to negative

collected from eBay.com in January 2003. The details about the

feedbacks than positive feedbacks when they plan to buy used or

procedure for the collection of the eBay data are covered in [12].

refurbished products [10]. Therefore, we can expect that the sellers

The Taobao data collection procedure is rather simpler but follows

in the online auction market of Taobao will behave the same way

the same one as used by Lin et al [12] for eBay reputation data

as those in

promote the positive reputation,

collection. In the following subsections, we will present the data

simultaneously, maintain the negative score as little as possible.

analysis outcomes based on the approaches used by Lin et al [12]

Fully aware sellers psychological trait, some buyers gouge the

with the extension in the neutral data analysis.

eBay:

to

sellers to reduce the price by threatening the negative scoring.

3.2 Overall statistics of 6-month reputation scores

Paradoxically, the reputation system on Taobao acts like a

double-edge sword to reduce the transaction risk as well as

From Table 1, we can identify that:

increase at the same time.

1)

The percentages of sellers who have received feedbacks

Though the above is common to all online reputation systems for

in two datasets, collected respectively from Taobao and

C2C markets, due to their different cultural background of the

eBay, are about the same (94% vs. 97%);

online traders in China, the differentiated design of the reputation

2)

information provision system, and the specialties of e-commerce

negative feedbacks is lower than that of eBay;

environment in China, there must be some subtle differences

between the online reputation statistics from that of eBay.

3)

Therefore, we followed the approach used by [11][12][13], to

The percentage of sellers in Taobao having received

neutral feedbacks is a little bit higher than that of eBay;

conduct a series of online reputation data analyses. The results are

4)

reported in the follow-up section.

3.

The percentage of sellers in Taobao having received

The average reputation scores the Taobao sellers have

received is much lower than that of sellers in eBay.

DATA ANALYSES AND DISCUSSIONS

Most of the above phenomena are consistent to the different

seniority levels of online sellers in the two C2C auction sites. The

3.1 Methodology and data collection

unusual situation of neutral scores comparison is to be explored

We investigated the 6-month reputation scores of Taobao.com,

further.

including positive, negative and neutral scores, and randomly

Table 1. Statistical Comparison of Seller Reputation Scores between Taobao and eBay
Dataset ID

Collection Date

Dataset

# of sellers

# of sellers

# of sellers

Per

seller

Per seller average

Per

seller

size

with 6-mon

with 6-mon

with 6-mon

average total

negative scores in

average neutral

total

negative

neutral

scores in 6

6 months

scores

scores > 0

scores > 0

scores > 0

months

in

months

TB050227

Feb. 27, 2005

200

188 (94.0%)

28 (14.0%)

67 (33.5%)

52.1

0.99

0.20

S-030116

Jan. 16, 2003

408

396 (97.0%)

193 (47.3%)

122 (29.9%)

590.2

5.8

5.3

topic in previous industrial organization research has long been a

3.3 Market structure of Taobao

proliferate field [19]. The traditional approach studies the

Lin et al [12] investigate eBays market structure with the

distribution of firm size or revenue to identify a number of

distribution of reputation scores. Market structure as an important

interesting issues, such as markets growth, firm entry and exit,

positive 6-month reputation scores of the Taobao sellers are also

and the market concentration. The most well-known initial

lognormally distributed (Wald-statistics = 2.470). Based on the

research effort is by Robert Gibrat [7], who pointed out that the

proportionate growth assumption, we can hypothesize that the

lognormality of firm size distribution indicated the proportionate

change of sellers total reputation scores is proportionate. Figure 5

growth of the market (see the appendix for the information about

compares the histograms of total 6-month reputation scores from

the lognormal distribution). Further work by Kalecki [9], Simon

the logarithms of the two datasets.

and Bonini [16], Singh and Whittington [17], etc. has gradually
enriched the market structure theory from different aspects.

Counts (out of 188 samples)

35

However, the traditionally tangible indicators for market structure

research, such as firm size and revenue, are difficult to obtain from
the online marketplaces because of the nature of anonymity. In
order to apply the well-established economic theory to e-market
structure research, Lin et al [12] suggest that the online reputation

30
25
20
15
10
5
0

0.
00
0.
49
0.
99
1.
48
1.
98
2.
47
2.
97
3.
46
3.
95
4.
45
4.
94
5.
44
5.
93
6.
44

scores can be used as the measure of firm capacity to study

electronic market structure:

Ln(X)

In the business context, there are many different economic and

(a) TB050327

11

10

and business scholars have long recognized reputation as an

based on all past behaviors [4]. At the macro level, sociologists

entity, either an individual or a firm, builds his or its reputation

assessment of a social entity's esteem or desirability [5]. A social

reputation can be basically regarded as the impression and

media visibility, and so on [5]. The rationale of our method is that

50
45
40
35
30
25
20
15
10
5
0
2

as marketing information, accounting reports, social responsibility,

Counts (Out of 396 samples)

non-economic signals about a conventional firm's capacity, such

Ln(x)

indicator of social stratification [15] and industrial stratification

[6], which helps to categorize a person or a firm into different

(b) S-030116 (Source: Lin et al [12])

strata. Similarly, the online reputation also signals the firms

Figure 5. The histogram of logarithmic 6-momth total

capacity in the online context.

reputation scores

Lin et al [12] report that the 6-month total reputation scores of

3.4 Negative and Neutral Feedback Rates

eBay sellers are lognormally distributed, which indicates the

Currently majority reported research work uses positive, negative,

match to the Gibrats law. Then the further exploration of the

and net reputation scores as the indicators of online reputation.

research reveals the growth pattern of eBays market with regard

Few touched the rate of them so far [11]. Empirical studies on

to different levels of periodic transaction volume.

online reputation are unanimously focused on the effect of sellers

feedback on item prices, although some have investigated the

In light of this research, we used the same approach to study the

effect on the probability of selling products. However, because of

distribution of total reputation scores of Taobao sellers in 6

the diverse nature of the research design, such as different types

months. The Wald-statistics of the logarithm of the total reputation

scores is 2.062, which is less than 2(d=2,

= 0.05)

and categories of items being investigated, different measures of

= 5.99, the critical

reputation, different data collection process, and different sample

value of normality test [8]. Therefore we can not reject the

sizes, no consistent findings were found across these studies.

hypothesis that the total 6-month reputation scores distribution of

Positive feedback might or might not increase price or probability

the Taobao sellers is lognormally distributed. In addition, the

of sale, so did negative feedback and net reputation score [15].

2)

The eBay sellers tend to have a higher NFR, while the

However, accumulated positive and negative scores, as well as

Taobao sellers are likely to have a higher NEU.

negative scores in a period of time, were found to be the most

Table 2. Ratios of 6-month Reputation Scores

influencing components of sellers reputation on buyer behavior.

Dataset

The fundamental point is why online buyers check a sellers online

reputation scores? Clearly, buyers want to estimate the level of
risk in transacting with this seller according to the reputation score.
Can positive score, negative or net reputation scores tell the likely
risk level?

Aver

Posi/

Nega/

Nega/

(Nega+

Total

Total

Total

Total

Neut)/Tot

TB050227

52.1

97.8%

0.37%

1.83%

2.2%

S-030116

590.2

98.1%

0.89%

0.98%

1.9%

Unfortunately, this issue has not been well

The interesting issue is why sellers in the two sites behave

investigated. At this point, we argue that the negative feedback

differently. Here we would likely to propose a few possible

rate (NFR) be the best indicator of the risk among all, which is so

reasons for further research.

far not well studied yet. There are several different types of NFRs:
overall NFR the one based on a specific set of traders; life-long

First, this could be owing to the difference in the settings of two

NFR the ratio calculated from a traders life-long reputation

online C2C auction markets. Taobao has a more formal process for

scores; and the NFR obtained from the reputation scores in a

a trader to become a seller sellers are requested to apply for an

period. From now on, we refer the NFR as the one calculated from

online store first. This extra overhead, though is not high, adds

reputation scores in a 6-month period without specific indication.

some cost to any selling effort, and consequently makes the selling
more serious. By February 2005, the total number of sellers

In addition to the work by Li and Lin [11], we are also interested

in the ratio of neutral feedback score and total feedback score the

(online stores) on Taobao is less than 100,000, which is much less

neutral feedback rate (NEU). Traditionally, Zhong Yong Zhi

than that on eBay.com but they are more dedicated and

Dao (the moderate approach) has been highly appreciated in

business-oriented. Although eBay also offers formal stores to

professional sellers, many sellers are occasionally selling their

Chinese culture. This means that instead of black and white

surplus goods and the selling is relatively easier. If buyers have

rating of a transaction outcome, many Chinese trader may prefer

believed this context, they will tend to deal with sellers as stores,

justifying it as grey. Considering the negative rating to a trading

which could be more trustworthy. When they are not fully satisfied

partner may incur a retaliation with the same negative rating which
may damage a buyers reputation more than the sellers, the buyer

by a transaction, they simply leave a neutral comment.

might prefer the neutral rating to the seller. Therefore,

Another reason could be the higher overhead to register into

investigating the neutral feedback may identify the main cultural

Taobao. Since cost of

difference between Chinese and non-Chinese online traders.

eBay.com, Taobao buyers typically left neutral feedback instead of

setting up an account is higher than that in

negative one to prevent the retaliation from the seller because a

According to the above discussion, we can see the importance of

high negative score may devalue his/her account and finally he/she

studying NFR and NEU they provide more information than that

has to discard the account. The accumulated less hostile comments

the positive feedback rate can tell and more influential to traders

will maintain both sides better reputation records.

as they signal the possibility of unpleasant outcomes. Comparing

the ratios of different types of reputation scores to the total scores

The third possible reason for the high NEU in Taobao could be

in Table 2, we have the following impressions:

resorted to the differences in the cultural backgrounds of the trader

1)

populations, as we have discussed at the beginning of the section.

The overall 6-month positive feedback rates in Taobao

Current Taobao dataset is not enough for this study. Therefore, we

and eBay are about the same, or alternatively the ratios

leave this issue open for further research.

of negative and neutral scores as a whole to the total

scores in Taobao and eBay are about the same.

lognormally distributed and so as they are changing proportionally

3.5 Non-positive Reputation Rate Distribution

over time. In addition, this paper found the situations that were not

Li & Lin [11] report that a sellers NFR is the best indicator for

touched in [12]: The neutral feedback rates of sellers in both

predicting the transaction risk with the seller. This implies that a

Taobao and eBay are also lognormally distributed; and the overall

traders NFRs in different periods are correlated. From reputation

neutral feedback rate of Taobao sellers is higher than that of eBay

data analysis, we found that both non-zero negative and neutral

sellers.

feedback rates (the ratio to the total reputation score) of Taobao

and eBay sellers fit the lognormal distribution well (see Table 3).

As this primitive research has limited data to further explore the

Since the values of NFR and NEU are in the interval of [0, 1] that

above findings, this paper has identified a few open issues left for

does not fit the domain of lognormal distribution, the lognormal

the research in next phase. First, we will collect the data in two

distribution is just an approximation. If we accept the assumption

time periods to study the change of Taobaos market structure over

of proportionate change of the rates over time (see the appendix),

time. This will be based on the comparison between two time

we can derive that the unfavorable feedback rates of sellers in

interceptions as well as the data from two time points using the

Taobao and eBay alike, NFR and NEU, tend to be monotonic in

same set of seller IDs. Second, we will design an experiment to

the change direction. That is, the higher NFR or NEU implies the

study the effect of cultural backgrounds of sellers on the reputation

same high level in the next time period. This also means that

feedback behavior and strategy. This will contribute to the

Taobaos reputation system can effectively provide the information

on-going cross-culture research effort in e-commerce with

to buyers how risky if they are to transact with a seller with regard

different perspectives. Finally, the neutral reputation feedback has

to the sellers reputation score. We can exclude the increment as

not been tackled yet in recent decade. The exploration in this issue

the overall trend of NFR and NEU because, by intuition, this will

will have the opportunity to contribute to the behavioral theories

result in the distribution of them moving towards 1. The further

with empirical evident.

outcome is that a rational seller will always try to maintain a good

5. REFERENCES

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Dateset

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Neural

rate

rate

TB050227

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S-030116

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A.1. Lognormal distribution

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2000.

When a random variable X is lognormally distributed, its

Li, D., and Z. Lin, Negative Reputation Rate as the Signal

logarithm, for example the natural logarithm ln(X), is normally

of Risk in Online Consumer-to-consumer Transactions,

distributed.

Proceedings of ICEB 2004, December 5-8, 2004, Beijing.

distributed with parameters E[Y] = E[ln(X)] and Y 2 ln( X ) 2 .

Lin, Z., D. Li, B. Janamanchi, and W. Huang, Reputation

Let V
x

Distribution and Consumer-to-Consumer Online Auction

Market Structure, forthcoming Decision Support Systems,

[13]

Then its logarithmic function Y = ln(X) is normally

x , we can obtain the variance and expectation of Y:

E[ X ]

2004.

Y 2 ln(1 Vx2 ) and E[Y ] ln E[ X ] Y

Lin, Z., D. Li, and W. Huang, "Reputation System and

E[X].

with regard to

Reputation Distribution An Exploratory Study in Online

The density function of the lognormal variable X is:

Consumer-to-Consumer Auctions," in Rasool Azari (eds),

Current

Security

Information

Management

Technology,

Ideal

Ethical
Group

Issues
Inc.,

of
f (X)

2003,

pp249-266.
[14]

Resnick, P., and R. Zeckhauser, Trust Among Strangers in

1
X Y

1 ln X E[Y] 2

exp
2
Y
2

A.2. Derivation of lognormal distribution

Internet Transactions: Empirical Analysis of eBay's

Reputation

System, in:

Michael

R.B.

(ed.),

In general, the lognormality of a random variable is rooted in the

The

proportionate change of its property. Consider a random variable

Economics of the Internet and E-Commerce (V.11),

X(t), t = 0, 1, , i-1, i, .., n, with a value X(0) at time 0. X(t)

Elsevier Science, Amsterdam, 2002.

changes in a period of length T with the following four

[15]

Shrum, W., and R. Wuthnow, Reputational Status of

assumptions:

Organization in Technical Systems, American Journal of

Sociology 93 (1988) 882-912.

1)

X(i)/X(i-1) = 1 + i, i.e. current value of X is

At the end of the period X(T) = X(0)i=1n(1+i). Applying the

proportional to its value in the last stage.

natural logarithm to both sides of the equation, we obtain: ln(X(T))

2)

Random variable i = i(T/n) are iid

3)

E[i] = T/n, where is a constant

4)

Var[i] = 2/n, where 2 is also a constant

= ln(X(0)) + i=1n ln(1+i). When n, i.e. i0, ln(1+i) i.

Therefore, when n ln(X(T)) = ln(X(0)) + i=1n i. According
to Central Limit Theorem, i=1n i will converge to a normal
distribution. Finally, X(T) is lognormally distributed.

10