Skip to Main Content
HBS Home
  • About
  • Academic Programs
  • Alumni
  • Faculty & Research
  • Baker Library
  • Giving
  • Harvard Business Review
  • Initiatives
  • News
  • Recruit
  • Map / Directions
Faculty & Research
  • Faculty
  • Research
  • Featured Topics
  • Academic Units
  • …→
  • Harvard Business School→
  • Faculty & Research→
Publications
Publications
  • 2020
  • Working Paper

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

By: Chiara Farronato, Andrey Fradkin, Bradley Larsen and Erik Brynjolfsson
  • Format:Print
  • | Language:English
ShareBar

Abstract

We study the effects of occupational licensing on consumer choices and market outcomes in a large online platform for residential home services. We exploit exogenous variation in the time at which licenses are displayed on the platform to identify the causal effects of licensing information on consumer choices. We find that the platform-verified licensing status of a professional is unimportant for consumer decisions relative to review ratings and prices. We confirm this result in an independent consumer survey. We also use variation in regulation stringency across states and occupations to measure the effects of licensing on aggregate market outcomes on the platform. Our results show that more stringent licensing regulations are associated with less competition and higher prices but not with any improvement in customer satisfaction as measured by review ratings or the propensity to use the platform again.

Keywords

Occupational Licensing; Consumer Protection; Governing Rules, Regulations, and Reforms; Consumer Behavior; Decision Making; Customer Satisfaction

Citation

Farronato, Chiara, Andrey Fradkin, Bradley Larsen, and Erik Brynjolfsson. "Consumer Protection in an Online World: An Analysis of Occupational Licensing." NBER Working Paper Series, No. 26601, January 2020.
  • Read Now

About The Author

Chiara Farronato

Technology and Operations Management
→More Publications

More from the Authors

    • 2022
    • Faculty Research

    Consumer Demand with Social Influences: Evidence from an E-Commerce Platform

    By: El Hadi Caoui, Chiara Farronato, John J. Horton and Robert Schultz
    • June 2022
    • American Economic Review

    The Welfare Effects of Peer Entry in the Accommodation Market: The Case of Airbnb and the Accommodation Industry

    By: Chiara Farronato and Andrey Fradkin
    • March 2022
    • Faculty Research

    Telepass: From Tolling to Mobility Platform

    By: Chiara Farronato
More from the Authors
  • Consumer Demand with Social Influences: Evidence from an E-Commerce Platform By: El Hadi Caoui, Chiara Farronato, John J. Horton and Robert Schultz
  • The Welfare Effects of Peer Entry in the Accommodation Market: The Case of Airbnb and the Accommodation Industry By: Chiara Farronato and Andrey Fradkin
  • Telepass: From Tolling to Mobility Platform By: Chiara Farronato
ǁ
Campus Map
Harvard Business School
Soldiers Field
Boston, MA 02163
→Map & Directions
→More Contact Information
  • Make a Gift
  • Site Map
  • Jobs
  • Harvard University
  • Trademarks
  • Policies
  • Accessibility
  • Digital Accessibility
Copyright © President & Fellows of Harvard College