How to Disrupt a Market

Edoardo Gallo, Rebecca Heath, Jonathan Lusthaus and Federico Varese

Cambridge Working Papers in Economics from Faculty of Economics, University of Cambridge

Abstract: Market design research in economics naturally focusses on how to improve market efficiency. Our objective here is exactly the opposite - how to design interventions that make a market less efficient. Our research is inspired by the growth of illicit markets online where reducing their efficiency may reduce societal harm. Using a web-based experiment, we find that a partial disruption to delivery is an effective method to decrease market efficiency. The decrease is borne by sellers who sell fewer goods and have lower earnings. A consequence of a disruption to delivery, however, is an increase in market concentration because it facilitates the emergence of a dominant seller. In contrast, we find that attacks on seller ratings are ineffective at reducing market efficiency. This study paves the way for evidence-based, causally driven investigations to aid policies to disrupt cybercrime and other illicit markets.

Date: 2026-06-19
New Economics Papers: this item is included in nep-des and nep-exp
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Persistent link: https://EconPapers.repec.org/RePEc:cam:camdae:2652

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