Publications
Publications
- July, 2024
- American Economic Journal: Applied Economics
Consumer Protection in an Online World: An Analysis of Occupational Licensing
By: Chiara Farronato, Andrey Fradkin, Bradley Larsen and Erik Brynjolfsson
Abstract
We study the demand and supply implications of occupational licensing using transaction-level data from a large online platform for home improvement services. We find that demand is more responsive to a professional's reviews than to the professional's platform-verified licensing status. We show some evidence that consumers view licenses and reviews as substitutes. We confirm the generality of our findings off the platform in an independent consumer survey. Combining state-level licensing regulation data with platform microdata, we find that more stringent requirements are associated with less competition, higher prices, and no increase in demand or consumer satisfaction.
Keywords
Occupational Licensing; Consumer Protection; Perception; Experience and Expertise; Public Opinion; Governing Rules, Regulations, and Reforms; Demand and Consumers
Citation
Farronato, Chiara, Andrey Fradkin, Bradley Larsen, and Erik Brynjolfsson. "Consumer Protection in an Online World: An Analysis of Occupational Licensing." American Economic Journal: Applied Economics 16, no. 3 (July, 2024): 549–579.