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Online Shopping and Platform Design with Ex Ante Registration Requirements

Author

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  • Florian Morath

    (Goethe University Frankfurt, 60323 Frankfurt, Germany; Max Planck Institute for Tax Law and Public Finance, 80539 Munich, Germany)

  • Johannes Münster

    (University of Cologne, 50923 Köln, Germany)

Abstract

We study platform design in online markets in which buying involves a (nonmonetary) cost for consumers caused by privacy and security concerns. Firms decide whether to require registration at their website before consumers learn relevant product information. We derive conditions under which a monopoly seller benefits from ex ante registration requirements and demonstrate that the profitability of registration requirements is increased when taking into account the prospect of future purchases or an informational value of consumer registration to the firm. Moreover, we consider the effectiveness of discounts (store credit) as a means to influence the consumers’ registration decision. Finally, we confirm the profitability of ex ante registration requirements in the presence of price competition.

Suggested Citation

  • Florian Morath & Johannes Münster, 2018. "Online Shopping and Platform Design with Ex Ante Registration Requirements," Management Science, INFORMS, vol. 64(1), pages 360-380, January.
    • Handle: RePEc:inm:ormnsc:v:64:y:2018:i:1:p:360-380
    DOI: 10.1287/mnsc.2016.2595
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    4. Amankwah-Amoah, Joseph, 2017. "Global consolidation of industries and business failures: insights from brick-and-mortar and online outlets," MPRA Paper 82509, University Library of Munich, Germany.

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    More about this item

    Keywords

    e-commerce; privacy concerns; security concerns; registration cost; platform design; monopoly; price competition; information; digital transformation;
    All these keywords.

    JEL classification:

    • D42 - Microeconomics - - Market Structure, Pricing, and Design - - - Monopoly
    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • L81 - Industrial Organization - - Industry Studies: Services - - - Retail and Wholesale Trade; e-Commerce

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