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Peer-to-Peer Markets

Author

Listed:
  • Liran Einav
  • Chiara Farronato
  • Jonathan Levin

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 the resulting impact on 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, 2015. "Peer-to-Peer Markets," NBER Working Papers 21496, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:21496
    Note: IO LE LS PR
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    File URL: http://www.nber.org/papers/w21496.pdf
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    References listed on IDEAS

    as
    1. Michael Dinerstein & Liran Einav & Jonathan Levin & Neel Sundaresan, 2014. "Consumer Price Search and Platform Design in Internet Commerce," Discussion Papers 13-038, Stanford Institute for Economic Policy Research.
    2. Jennifer Brown & John Morgan, 2009. "How Much Is a Dollar Worth? Tipping versus Equilibrium Coexistence on Competing Online Auction Sites," Journal of Political Economy, University of Chicago Press, vol. 117(4), pages 668-700, August.
    3. Thomas W. Quan & Kevin R. Williams, 2016. "Product Variety, Across-Market Demand Heterogeneity, and the Value of Online Retail," Cowles Foundation Discussion Papers 2054, Cowles Foundation for Research in Economics, Yale University.
    4. Alexandre Cornière & Greg Taylor, 2014. "Integration and search engine bias," RAND Journal of Economics, RAND Corporation, vol. 45(3), pages 576-597, September.
    5. Gregory Lewis, 2011. "Asymmetric Information, Adverse Selection and Online Disclosure: The Case of eBay Motors," American Economic Review, American Economic Association, vol. 101(4), pages 1535-1546, June.
    6. Mark Armstrong & Jidong Zhou, 2011. "Paying for Prominence," Economic Journal, Royal Economic Society, vol. 121(556), pages 368-395, November.
    7. Gary Bolton & Ben Greiner & Axel Ockenfels, 2013. "Engineering Trust: Reciprocity in the Production of Reputation Information," Management Science, INFORMS, vol. 59(2), pages 265-285, January.
    8. Ginger Zhe Jin & Andrew Kato, 2007. "Dividing Online and Offline: A Case Study," Review of Economic Studies, Oxford University Press, vol. 74(3), pages 981-1004.
    9. Chris Nosko & Steven Tadelis, 2015. "The Limits of Reputation in Platform Markets: An Empirical Analysis and Field Experiment," NBER Working Papers 20830, National Bureau of Economic Research, Inc.
    10. Andrei Hagiu & Bruno Jullien, 2011. "Why do intermediaries divert search?," RAND Journal of Economics, RAND Corporation, vol. 42(2), pages 337-362, June.
    11. Liran Einav & Theresa Kuchler & Jonathan Levin & Neel Sundaresan, 2015. "Assessing Sale Strategies in Online Markets Using Matched Listings," American Economic Journal: Microeconomics, American Economic Association, vol. 7(2), pages 215-247, May.
    12. Milgrom, Paul, 2010. "Simplified mechanisms with an application to sponsored-search auctions," Games and Economic Behavior, Elsevier, vol. 70(1), pages 62-70, September.
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    Citations

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    Cited by:

    1. Horton, John J. & Zeckhauser, Richard J., 2016. "Owning, Using and Renting: Some Simple Economics of the "Sharing Economy"," Working Paper Series 16-007, Harvard University, John F. Kennedy School of Government.
    2. Fremstad, Anders, 2017. "Does Craigslist Reduce Waste? Evidence from California and Florida," Ecological Economics, Elsevier, vol. 132(C), pages 135-143.
    3. Stephen Sheppard & Andrew Udell, 2016. "Do Airbnb Properties Affect House Prices?," Department of Economics Working Papers 2016-03, Department of Economics, Williams College.
    4. Cristiano Codagnone & Federico Biagi & Fabienne Abadie, 2016. "The Passions and the Interests: Unpacking the ‘Sharing Economy’," JRC Working Papers JRC101279, Joint Research Centre (Seville site).
    5. repec:eee:jhouse:v:38:y:2017:i:c:p:14-24 is not listed on IDEAS
    6. Arslan, A.M. & Agatz, N.A.H. & Kroon, L.G. & Zuidwijk, R.A., 2016. "Crowdsourced Delivery: A Dynamic Pickup and Delivery Problem with Ad-hoc Drivers," ERIM Report Series Research in Management ERS-2016-003-LIS, Erasmus Research Institute of Management (ERIM), ERIM is the joint research institute of the Rotterdam School of Management, Erasmus University and the Erasmus School of Economics (ESE) at Erasmus University Rotterdam.
    7. Peitz, Martin & Schwalbe, Ulrich, 2016. "Zwischen Sozialromantik und Neoliberalismus: Zur Ökonomie der Sharing-Economy," ZEW Discussion Papers 16-033, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
    8. Schwalbe Ulrich & Peitz Martin, 2016. "Kollaboratives Wirtschaften oder Turbokapitalismus?: Zur Ökonomie der Sharing economy," Perspektiven der Wirtschaftspolitik, De Gruyter, vol. 17(3), pages 232-252, September.
    9. Cristiano Codagnone & Fabienne Abadie & Federico Biagi, 2016. "The Future of Work in the ‘Sharing Economy’. Market Efficiency and Equitable Opportunities or Unfair Precarisation?," JRC Working Papers JRC101280, Joint Research Centre (Seville site).
    10. Haucap, Justus & Heimeshoff, Ulrich, 2017. "Ordnungspolitik in der digitalen Welt," DICE Ordnungspolitische Perspektiven 90, University of Düsseldorf, Düsseldorf Institute for Competition Economics (DICE).
    11. Mark Merante & Keren Mertens Horn, 2016. "Is Home Sharing Driving up Rents? Evidence from Airbnb in Boston," Working Papers 2016_03, University of Massachusetts Boston, Economics Department.

    More about this item

    JEL classification:

    • D02 - Microeconomics - - General - - - Institutions: Design, Formation, Operations, and Impact
    • D47 - Microeconomics - - Market Structure, Pricing, and Design - - - Market Design
    • L86 - Industrial Organization - - Industry Studies: Services - - - Information and Internet Services; Computer Software

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