University of Southern California
Essays on quality screening in two-sided markets.
Degree: PhD, Economics, 2015, University of Southern California
In two-sided markets, consumers care not only about
the number of sellers with which they can interact, but also about
the quality of products or services these sellers provide. Previous
work on two-sided markets has mainly focused on the quantity
externality; Little attention has been paid to the quality
externality. In this dissertation, I allow both quality and
quantity play a role in the end-users' interactions, and analyze
how platforms can use quality screening to alleviate the problem of
asymmetric information of quality and motivate end-users'
participations; and discuss how a platform can implement quality
screening and choose optimal quality standard. ❧ The first essay
examines the impact of quality screening on end-users' choices in a
context of competitive platforms. The analysis proceeds from both
theoretical and empirical perspectives. In the theory, I build a
model in which two platforms compete but only one of them screens
sellers' products. I show that the quality screening influences
consumers' expectations of product quality and their choice of
sellers and platforms. The resulting screening effect, together
with the network and competition effects, further drives sellers to
enter different platforms. Comparative static analysis indicates
that sellers' incentives to join the platform that screens products
follow an inverted U-curve with respect to the observable quality
of products. In the empirical study, I transfer the theory to a
simultaneous entry game with incomplete information, and carry out
the estimation using the Nested Pseudo Likelihood (NPL) estimator
with the data from Tmall and Taobao, two online trading platforms
operated by Alibaba. The estimation results are consistent with the
theory. The counterfactual analysis suggests that quality screening
improves the consumers' utility and enlarges Alibaba's market
share. ❧ In the second essay, I investigate the optimal thresholds
of screening for end-users and the platform. I consider a monopoly
platform which utilizes screening to select qualified products onto
the market. I find that the platform's profitably optimal screening
standard falls below the one that maximizes the consumers' welfare.
And the platform prefers to implement quality screening by just
informing consumers of the threshold instead of by fully revealing
the products' true quality.
Advisors/Committee Members: Tan, Guofu (Committee Chair), Ridder, Geert (Committee Member), Dukes, Anthony (Committee Member).
Subjects/Keywords: asymmetric information; quality screening; two-sided markets; duopoly platform competition; discrete choice game; structural estimation; monopoly platform; optimal quality standard
to Zotero / EndNote / Reference
APA (6th Edition):
Wang, J. (2015). Essays on quality screening in two-sided markets. (Doctoral Dissertation). University of Southern California. Retrieved from http://digitallibrary.usc.edu/cdm/compoundobject/collection/p15799coll3/id/610424/rec/2476
Chicago Manual of Style (16th Edition):
Wang, Jin. “Essays on quality screening in two-sided markets.” 2015. Doctoral Dissertation, University of Southern California. Accessed September 21, 2020.
MLA Handbook (7th Edition):
Wang, Jin. “Essays on quality screening in two-sided markets.” 2015. Web. 21 Sep 2020.
Wang J. Essays on quality screening in two-sided markets. [Internet] [Doctoral dissertation]. University of Southern California; 2015. [cited 2020 Sep 21].
Available from: http://digitallibrary.usc.edu/cdm/compoundobject/collection/p15799coll3/id/610424/rec/2476.
Council of Science Editors:
Wang J. Essays on quality screening in two-sided markets. [Doctoral Dissertation]. University of Southern California; 2015. Available from: http://digitallibrary.usc.edu/cdm/compoundobject/collection/p15799coll3/id/610424/rec/2476