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  • 2016
  • Article
  • Annual Review of Economics

Peer-to-Peer Markets

By: Liran Einav, Chiara Farronato and Jonathan Levin
  • Format:Print
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Abstract

Peer-to-peer markets such as eBay, Uber, and Airbnb allow small suppliers to compete with traditional providers of goods or services. We view the primary function of these markets as making it easy for buyers to find sellers and engage in convenient, trustworthy transactions. We discuss elements of market design that make this possible, including search and matching algorithms, pricing, and reputation systems. We then develop a simple model of how these markets enable entry by small or flexible suppliers, and the resulting impact on existing firms. Finally, we consider the regulation of peer-to-peer markets, and the economic arguments for different approaches to licensing and certification, data and employment regulation.

Keywords

Peer-to-peer; Online Platforms; Matching; Innovation; Market Platforms; Marketplace Matching; Market Design; Search Technology; Technology Adoption; Network Effects; Market Entry And Exit

Citation

Einav, Liran, Chiara Farronato, and Jonathan Levin. "Peer-to-Peer Markets." Annual Review of Economics 8 (2016): 615–635.
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About The Author

Chiara Farronato

Technology and Operations Management
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More from the Authors
  • Getting Started in R Cloud Studio By: Chiara Farronato and Caleb Kwon
  • T-tests: Theory and Practice By: Michael Parzen, Natalie Epstein, Chiara Farronato and Michael Toffel
  • Dog Eat Dog: Measuring Network Effects Using a Digital Platform Merger By: Chiara Farronato, Jessica Fong and Andrey Fradkin
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