Flagship Entry in Online Marketplaces

58 Pages Posted: 21 Aug 2021 Last revised: 11 May 2022

See all articles by Ginger Zhe Jin

Ginger Zhe Jin

University of Maryland - Department of Economics; National Bureau of Economic Research (NBER)

Zhentong Lu

Government of Canada - Bank of Canada

Xiaolu Zhou

Xiamen University - School of Economics

Lu Fang

Zhejiang University

Multiple version iconThere are 2 versions of this paper

Date Written: May 6, 2022

Abstract

In this paper, we empirically study how flagship entry in an online marketplace
affects consumers, the platform, and various sellers on the platform. We find flagship entry may benefit consumers by expanding the choice set, by intensifying price competition within the entry brand, and by improving consumer perception for parts of the platform. In the meantime, flagship entry cannibalizes the sales of same-brand sellers, while other brands may gain as the buyer base expands on the platform. Counterfactual simulation suggests that flagship entry improves the gross merchandise value (GMV) of the platform and overall consumer welfare in most cases.

Keywords: platform, online, entry, flagship, brand

JEL Classification: D4, L1, L8

Suggested Citation

Jin, Ginger Zhe and Lu, Zhentong and Zhou, Xiaolu and Fang, Lu, Flagship Entry in Online Marketplaces (May 6, 2022). Available at SSRN: https://ssrn.com/abstract=3908123 or http://dx.doi.org/10.2139/ssrn.3908123

Ginger Zhe Jin

University of Maryland - Department of Economics ( email )

College Park, MD 20742
United States
301-405-3484 (Phone)
301-405-3542 (Fax)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Zhentong Lu (Contact Author)

Government of Canada - Bank of Canada ( email )

234 Wellington Street
Ontario, Ottawa K1A 0G9
Canada

Xiaolu Zhou

Xiamen University - School of Economics ( email )

China

Lu Fang

Zhejiang University ( email )

38 Zheda Road
Hangzhou, Zhejiang 310058
China

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