Platform Credit, Advertising, and Customer Capital

Matthias Efing, Yi Huang (), Ruobing Han, Qi Sun and Daniel Yi Xu
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Matthias Efing: HEC Paris - Ecole des Hautes Etudes Commerciales

Working Papers from HAL

Abstract: Advertising plays a particularly crucial role in online marketplaces, where thousands of merchants offer similar products and compete for visibility and consumer attention. This study theoretically and empirically demonstrates that merchants on e-commerce platforms often engage in "underadvertising" due to financial constraints. By leveraging quasi-random variation in merchants' access to credit from a major platform lender, we establish that alleviating financial constraints leads to substantial increases in advertising expenditures, enhanced shop visibility among customers, and ultimately, accelerated sales growth. Notably, high-quality merchants with top customer ratings are especially likely to utilize platform credit to invest in advertising.

Keywords: platform credit; platform lending; e-commerce (search for similar items in EconPapers)
Date: 2025-04-01
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Persistent link: https://EconPapers.repec.org/RePEc:hal:wpaper:hal-05107660

DOI: 10.2139/ssrn.5190309

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