IDEAS home Printed from https://ideas.repec.org/a/spr/infsem/v16y2018i4d10.1007_s10257-017-0349-8.html
   My bibliography  Save this article

To compete or to take over? An economic analysis of new sellers on e-commerce marketplaces

Author

Listed:
  • Hong Xu

    (The Hong Kong University of Science and Technology)

Abstract

The rise of e-commerce has inspired entrepreneurs to start their businesses online. E-commerce platforms, such as eBay, Amazon Marketplace, and Taobao, feature low barriers of entry to their sellers, as there is very low cost involved in entering an online marketplace and becoming a seller. In the meantime, we observe that many sellers choose to incur a much higher cost and enter the marketplace by taking over an existing seller’s account. We identify an interesting problem faced by entrants to online marketplaces: should they enter as new or should they take over another seller? Entrants’ decisions are complicated by several factors, including the reputation of the existing seller, the entrant’s capability, and the information asymmetry between the entrant and the incumbent. We develop an economic model to study the interactions between an entrant and an incumbent in an e-commerce marketplace. We discover that reputation plays an important role in the entrant’s competition-takeover decision. Our findings carry useful insights for e-commerce platforms in understanding the impact of entrants on the existing community of sellers.

Suggested Citation

  • Hong Xu, 2018. "To compete or to take over? An economic analysis of new sellers on e-commerce marketplaces," Information Systems and e-Business Management, Springer, vol. 16(4), pages 817-829, November.
    • Handle: RePEc:spr:infsem:v:16:y:2018:i:4:d:10.1007_s10257-017-0349-8
    DOI: 10.1007/s10257-017-0349-8
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1007/s10257-017-0349-8
    File Function: Abstract
    Download Restriction: Access to the full text of the articles in this series is restricted.
    File URL: https://libkey.io/10.1007/s10257-017-0349-8?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Malmendier, Ulrike & Tate, Geoffrey, 2008. "Who makes acquisitions? CEO overconfidence and the market's reaction," Journal of Financial Economics, Elsevier, vol. 89(1), pages 20-43, July.
    2. Chen, Yongmin, 2001. "On Vertical Mergers and Their Competitive Effects," RAND Journal of Economics, The RAND Corporation, vol. 32(4), pages 667-685, Winter.
    3. Sanjeev Dewan & Vernon Hsu, 2004. "Adverse Selection In Electronic Markets: Evidence From Online Stamp Auctions," Journal of Industrial Economics, Wiley Blackwell, vol. 52(4), pages 497-516, December.
    4. Garth Saloner, 1987. "Predation, Mergers, and Incomplete Information," RAND Journal of Economics, The RAND Corporation, vol. 18(2), pages 165-186, Summer.
    5. Steven Tadelis, 2002. "The Market for Reputations as an Incentive Mechanism," Journal of Political Economy, University of Chicago Press, vol. 110(4), pages 854-882, August.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Junbin Wang & Xuan Gao & Zhiguo Wang, 2021. "Sustainable Supply Chain Decisions under E-Commerce Platform Marketplace with Competition," Sustainability, MDPI, vol. 13(8), pages 1-23, April.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Chen, Yong & Mak, Barry & Li, Zhou, 2013. "Quality deterioration in package tours: The interplay of asymmetric information and reputation," Tourism Management, Elsevier, vol. 38(C), pages 43-54.
    2. Sawssen Khlifi & Ghazi Zouari, 2021. "The Impact of CEO Overconfidence on Real Earnings Management: Evidence from M&A Transactions," Journal of Accounting and Management Information Systems, Faculty of Accounting and Management Information Systems, The Bucharest University of Economic Studies, vol. 20(3), pages 402-424, September.
    3. Ginger Zhe Jin & Andrew Kato & John A. List, 2010. "That’S News To Me! Information Revelation In Professional Certification Markets," Economic Inquiry, Western Economic Association International, vol. 48(1), pages 104-122, January.
    4. Fogel, Kathy & Jandik, Tomas & McCumber, William R., 2018. "CFO social capital and private debt," Journal of Corporate Finance, Elsevier, vol. 52(C), pages 28-52.
    5. Bobba, Matteo & Frisancho, Veronica, 2022. "Self-perceptions about academic achievement: Evidence from Mexico City," Journal of Econometrics, Elsevier, vol. 231(1), pages 58-73.
    6. Bo-Hung Chiou & Shen-Ho Chang, 2020. "Influence of Investment Efficiency by Managers and Accounting Conservatism on Idiosyncratic Risks to Investors," Advances in Management and Applied Economics, SCIENPRESS Ltd, vol. 10(1), pages 1-8.
    7. Ulrike Malmendier & Vincenzo Pezone & Hui Zheng, 2023. "Managerial Duties and Managerial Biases," Management Science, INFORMS, vol. 69(6), pages 3174-3201, June.
    8. Alexandridis, G. & Antypas, N. & Travlos, N., 2017. "Value creation from M&As: New evidence," Journal of Corporate Finance, Elsevier, vol. 45(C), pages 632-650.
    9. Sandra Ludwig & Julia Nafziger, 2011. "Beliefs about overconfidence," Theory and Decision, Springer, vol. 70(4), pages 475-500, April.
    10. Prokudina, Elena & Renneboog, Luc & Tobler, Philippe, 2015. "Does Confidence Predict Out-of-Domain Effort?," Discussion Paper 2015-055, Tilburg University, Center for Economic Research.
    11. Roger Bate & Ginger Zhe Jin & Aparna Mathur, 2012. "In Whom We Trust: The Role of Certification Agencies in Online Drug Markets," NBER Working Papers 17955, National Bureau of Economic Research, Inc.
    12. Adam, Tim R. & Burg, Valentin & Scheinert, Tobias & Streitz, Daniel, 2014. "Managerial Optimism and Debt Contract Design: The Case of Syndicated Loans," Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems 475, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich.
    13. Jonathan F Schulz & Christian Thöni, 2016. "Overconfidence and Career Choice," PLOS ONE, Public Library of Science, vol. 11(1), pages 1-8, January.
    14. David Hirshleifer & Angie Low & Siew Hong Teoh, 2012. "Are Overconfident CEOs Better Innovators?," Journal of Finance, American Finance Association, vol. 67(4), pages 1457-1498, August.
    15. Cho, Daegon & Hwang, Youngdeok & Park, Jongwon, 2018. "More buzz, more vibes: Impact of social media on concert distribution," Journal of Economic Behavior & Organization, Elsevier, vol. 156(C), pages 103-113.
    16. Huang, Ronghong & Tan, Kelvin Jui Keng & Faff, Robert W., 2016. "CEO overconfidence and corporate debt maturity," Journal of Corporate Finance, Elsevier, vol. 36(C), pages 93-110.
    17. King, Timothy & Srivastav, Abhishek & Williams, Jonathan, 2016. "What's in an education? Implications of CEO education for bank performance," Journal of Corporate Finance, Elsevier, vol. 37(C), pages 287-308.
    18. Patty Bick & Matthew D. Crook & Andrew A. Lynch & Brian R. Walkup, 2017. "Does Distance Matter In Mergers And Acquisitions?," Journal of Financial Research, Southern Finance Association;Southwestern Finance Association, vol. 40(1), pages 33-54, March.
    19. Ivana Vitanova, 2022. "CEO overconfidence and corporate tournaments," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 43(5), pages 1423-1438, July.
    20. repec:hal:wpspec:info:hdl:2441/7o52iohb7k6srk09mit038srm is not listed on IDEAS
    21. Genti Kostandini & Elton Mykerezi & Eftila Tanellari & Nour Dib, 2011. "Does Buyer Experience Pay Off? Evidence from eBay," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 39(3), pages 253-265, November.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:spr:infsem:v:16:y:2018:i:4:d:10.1007_s10257-017-0349-8. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.