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
Date Written: January 30, 2019
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
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