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Peer-to-Peer Markets

Author

Listed:
  • Liran Einav

    (Department of Economics, Stanford University, Stanford, California 94305-6072
    National Bureau of Economic Research, Cambridge, Massachusetts 02138)

  • Chiara Farronato

    (Harvard Business School, Boston, Massachusetts 02163)

  • Jonathan Levin

    (Department of Economics, Stanford University, Stanford, California 94305-6072
    National Bureau of Economic Research, Cambridge, Massachusetts 02138)

Abstract

Peer-to-peer markets such as eBay, Uber, and Airbnb allow small suppliers to compete with traditional providers of goods or services. We view the primary function of these markets as making it easy for buyers to find sellers and engage in convenient, trustworthy transactions. We discuss elements of market design that make this possible, including search and matching algorithms, pricing, and reputation systems. We then develop a simple model of how these markets enable entry by small or flexible suppliers, and how they impact existing firms. Finally, we consider the regulation of peer-to-peer markets and the economic arguments for different approaches to licensing and certification, data, and employment regulation.

Suggested Citation

  • Liran Einav & Chiara Farronato & Jonathan Levin, 2016. "Peer-to-Peer Markets," Annual Review of Economics, Annual Reviews, vol. 8(1), pages 615-635, October.
    • Handle: RePEc:anr:reveco:v:8:y:2016:p:615-635
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    File URL: http://www.annualreviews.org/doi/10.1146/annurev-economics-080315-015334
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    Keywords

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    JEL classification:

    • D47 - Microeconomics - - Market Structure, Pricing, and Design - - - Market Design
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L81 - Industrial Organization - - Industry Studies: Services - - - Retail and Wholesale Trade; e-Commerce
    • L86 - Industrial Organization - - Industry Studies: Services - - - Information and Internet Services; Computer Software

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