Consumer Protection in an Online World: An Analysis of Occupational Licensing

Chiara Farronato, Andrey Fradkin, Bradley J. Larsen and Erik Brynjolfsson

American Economic Journal: Applied Economics, 2024, vol. 16, issue 3, 549-79

Abstract: We study the demand and supply implications of occupational licensing using transaction-level data from a large online platform for home improvement services. We find that demand is more responsive to a professional's reviews than to the professional's platform-verified licensing status. We show some evidence that consumers view licenses and reviews as substitutes. We confirm the generality of our findings off the platform in an independent consumer survey. Combining state-level licensing regulation data with platform microdata, we find that more stringent requirements are associated with less competition, higher prices, and no increase in demand or consumer satisfaction.

JEL-codes: D18 J44 L74 L84 (search for similar items in EconPapers)
Date: 2024
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Working Paper: Consumer Protection in an Online World: An Analysis of Occupational Licensing (2020)
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DOI: 10.1257/app.20210716

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