Role of Price Promotion in Matching Markets

Yusuke Narita () and Kosuke Uetake ()
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Kosuke Uetake: Yale School of Management

No 18-10, Working Papers from NET Institute

Abstract: We examine the role of promotion in online peer-to-peer (P2P) two-sided platforms as a device to facilitate matchings. In particular, we consider the price promotion on the service fees that users pay for the platform, which is a main source of platform revenues. To analyze its effects, we conduct a randomized controlled experiment on fee promotions in an online crowdsourcing platform in Japan. In the experiment, we randomly send fee promotions that discount the platform service fee and randomly send information about the detailed fee schedule. The preliminary results from the experiment reveal the following findings. First, the number of applications that freelancers submit to any employer increases significantly with greater fee discounts, while the number of contracts do not increase much. This implies that employers, who are not aware of the discounts and do not pay the fees, still reject applications even though they receive on average more applications. Second, price promotions have spillover effects on service domains outside the experiment.

Keywords: Online peer-to-peer two-sided platforms; promotion; fee; price sensitivity; spillover effects (search for similar items in EconPapers)
JEL-codes: J2 J3 L1 M3 (search for similar items in EconPapers)
Pages: 17 pages
Date: 2018-10
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