How Do Professional Sellers Benefit Individual Sellers on Online Peer-to-Peer Platforms? A Study on Spillover Effects through Two-Sided Matching

Posted: 12 Feb 2019

See all articles by Xia Zhao

Xia Zhao

University of Georgia

Ling Xue

Georgia State University

Peijian Song

Nanjing University

Elena Karahanna

affiliation not provided to SSRN

Date Written: January 30, 2019

Abstract

On peer-to-peer (P2P) platforms, the participation of professional sellers often creates competitive pressure on individual amateur sellers. However, the superior knowledge and expertise that professional sellers bring to the market may also indirectly benefit individual sellers through spillover effects. In this study, we investigate how the benefits of professional sellers' superior information may spillover to individual sellers through the two-sided matching process. We adopt rental property P2P platform as a context and focus on the detailed contacts between the hosts and the renters in the pre-contract matchmaking process. Using proprietary operational-level data about a major rental property P2P platform in China, our empirical analysis reveals two types of spillover benefits from professional hosts. First, we find that in the process of two-sided matching, when a renter contacts professional hosts in a certain neighborhood, s/he also derives higher utility from choosing other individual-offered properties in the same neighborhood compared to individual-offered properties in other neighborhoods. Such "local effect" helps improve the attractiveness of individual-offered properties that are co-located with professional-offered properties. Second, we find that when the renter finally chooses an individual-offered property, his/her contacts with other professional hosts in the matching process help reduce the ex post dissatisfaction about the transaction. This suggests that the better information of professional hosts can spill over to improve the quality of matching between renters and other individual hosts. Our study has important implications for theories of two-sided matching, information spillover, and the governance of heterogeneous sellers on P2P platforms.

Keywords: Peer-to-peer platforms, sharing economy, spillover, seller heterogeneity, two-sided matching, information search

Suggested Citation

Zhao, Xia and Xue, Ling and Song, Peijian and Karahanna, Elena, How Do Professional Sellers Benefit Individual Sellers on Online Peer-to-Peer Platforms? A Study on Spillover Effects through Two-Sided Matching (January 30, 2019). Available at SSRN: https://ssrn.com/abstract=3327512

Xia Zhao (Contact Author)

University of Georgia ( email )

610 S. Lumpkin St.
Benson C404
Athens, GA 30602
United States

Ling Xue

Georgia State University ( email )

35 Broad Street
Atlanta, GA 30303-3083
United States

Peijian Song

Nanjing University ( email )

No. 22 Hankou Road
Nanjing, Jiangsu 210093
China

Elena Karahanna

affiliation not provided to SSRN

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