How Digital Platforms Affect Local Entrepreneurial Activities: Evidence from the Staggered Entry of Craigslist

Abstract

Access to markets is critical for entrepreneurial success, yet many face significant barriers. This study argues that digital platforms functioning as peer-to-peer marketplaces can facilitate entrepreneurial activity by improving market access for new ventures. Using the staggered entry of Craigslist into various markets, we find that Craigslist's entry increased local entrepreneurial activities, especially in low-income regions. Moreover, individuals from lower-income households, as well as Black and immigrant communities, were more likely to create new ventures following Craigslist's entry. Firms founded after Craigslist's entry were also smaller in size, potentially reflecting more efficient management, and primarily operated in B2C rather than B2B sectors. This study highlights how multisided platforms can empower individuals with limited market access and resources, ultimately democratizing entrepreneurship in the digital age.

Keywords: Digital Platform, Peer-to-Peer Marketplace, Entrepreneurship, Staggered Differencein-Differences, Craigslist

JEL Classification: L26, M13, M15, M21, R11, C23