Online Shopping and Platform Design with Ex Ante Registration Requirements

56 Pages Posted: 16 Dec 2014 Last revised: 7 Dec 2015

See all articles by Florian Morath

Florian Morath

Department of Public Finance, University of Innsbruck; Max Planck Institute for Tax Law and Public Finance

Johannes Münster

Wissenschaftszentrum Berlin fuer Sozialforschung (WZB) - Market Processes and Governance

Date Written: December 12, 2014

Abstract

We study platform design in online markets in which buying involves a (non-monetary) cost for consumers caused by privacy and security concerns. Firms decide whether to require registration at their website before consumers learn the price and all relevant product information. We show that a monopoly seller requires ex ante registration in equilibrium if and only if the consumer's ’registration cost is sufficiently low. The result is reinforced when incorporating future purchases or an informational value of consumer registration to the fi…rm, and it is robust to introducing price competition. We also show that discounts (store credit) can increase the share of consumers who register and hence a fi…rm'’s profi…t even though discounts distort the equilibrium price.

Keywords: E-commerce; Privacy concerns; Security concerns; Registration cost; Platform design; Price competition; Information

JEL Classification: D42; D43; D82; D83; L81

Suggested Citation

Morath, Florian and Münster, Johannes, Online Shopping and Platform Design with Ex Ante Registration Requirements (December 12, 2014). Working Paper of the Max Planck Institute for Tax Law and Public Finance No. 2014 - 21, Available at SSRN: https://ssrn.com/abstract=2537431 or http://dx.doi.org/10.2139/ssrn.2537431

Florian Morath (Contact Author)

Department of Public Finance, University of Innsbruck ( email )

Max Planck Institute for Tax Law and Public Finance ( email )

Marstallplatz 1
Munich, 80539
Germany

Johannes Münster

Wissenschaftszentrum Berlin fuer Sozialforschung (WZB) - Market Processes and Governance ( email )

Reichpietschufer 50
D-10785 Berlin
Germany

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
85
Abstract Views
762
rank
323,287
PlumX Metrics