More Is Better, Or Not? An Empirical Analysis of Buyer Preferences for Variety on the E-Market

Senay Sokullu

Journal of Economic Behavior & Organization, 2023, vol. 209, issue C, 450-470

Abstract: This paper examines the effect of the number of sellers of a good on buyers’ demand, using an extensive dataset from an e-commerce platform (PriceMinister.com) in France. Accounting for seller and product characteristics constitutes variety amongst the same product. Although buyers may prefer a wide variety, it can introduce a search cost. Using a flexible semiparametric specification, I find that the demand of buyers does not monotonically increase in relation to the number of sellers (variety), contrary to assumptions in the literature. I illustrate the consequences of misspecification of these network effects through a counterfactual simulation.

Keywords: Nonparametric IV regression; Two-Sided markets; E-Commerce; Online platforms (search for similar items in EconPapers)
JEL-codes: C14 C30 L14 (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jeborg:v:209:y:2023:i:c:p:450-470

DOI: 10.1016/j.jebo.2023.03.022

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