Three Essays on Economics of Online Communities and Platforms

• Main Author: Cao, Zike
• Format: Dissertation
• Language: English
• Published: ProQuest Dissertations & Theses 01-01-2016
• Subjects: Economics; Information science
• ISBN: 0438130308; 9780438130302

Rapidly growing online communities or platforms are becoming the heart of our economy and society. In the three studies reported in this thesis, we investigate the influences resulted from this new trend of platform economy from diverse perspectives such as consumer privacy and welfare, firms' marketing effectiveness, and government regulation. In the first study, we look at a novel privacy concern due to peer disclosure of sensitive personal information in online social communities. Peer disclosure is modeled as imposing a negative externality on other people. We study two policy instruments—nudging and quota—and a combination of the two. We also compare the incentives of the platform owner and social planner, and draw related managerial and policy implications. In the second study, based on a data set collected from Groupon.com, we empirically investigate whether the discounts offered by online daily deals help attract consumer purchases for local businesses. We find that deep discounts reduce sales. Moreover, this negative effect of discounts is more prominent among credence goods and unpopular deals, and when the deals are offered in cities with higher income and better education, indicating consumers are concerned about the quality of the deals. In the third study, based on a data set collected from Taobao.com, we empirically examine the interaction effect between performance-based advertising and price discounting on firm sales. We find significant negative interaction effect between performance-based advertising and price discounting, which might be due to that the signaling strength of performance-based advertising is attenuated by price discounting, which itself acts as a negative quality signal. In consistent with this, we find the negative interaction effect is more pronounced among stroller sellers compared to diaper sellers. These results bear important implications for firms' optimal planning of "marketing mix" in the current digital age.