Working Paper: NBER ID: w21496
Authors: 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.
Keywords: peer-to-peer markets; market design; regulation
JEL Codes: D02; D47; L86
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| peer-to-peer market design (D47) | lower entry barriers for small suppliers (L81) |
| lower entry barriers for small suppliers (L81) | increase competition in traditional markets (L19) |
| peer-to-peer market design (D47) | enhance trust among users (Z13) |
| enhance trust among users (Z13) | facilitate market entry (F23) |
| peer-to-peer market design (D47) | reduce need for extensive upfront screening (L15) |
| regulatory implications of peer-to-peer markets (D26) | adapt traditional regulatory frameworks (G18) |