More is Better or Not? An Empirical Analysis of Buyer Preferences for Variety on the E-Market

Senay Sokullu

doi:10.1016/j.jebo.2023.03.022

More is Better or Not? An Empirical Analysis of Buyer Preferences for Variety on the E-Market

Senay Sokullu^*

^*Corresponding author for this work

School of Economics

Research output: Contribution to journal › Article (Academic Journal) › peer-review

1 Citation (Scopus)

Abstract

This paper examines the effect of the number of sellers of a good on buyers’ demand, using an extensive dataset from an e-commerce platform (PriceMinister.com) in France. Accounting for seller and product characteristics constitutes variety amongst the same product. Although buyers may prefer a wide variety, it can introduce a search cost. Using a flexible semiparametric specification, I find that the demand of buyers does not monotonically increase in relation to the number of sellers (variety), contrary to assumptions in the literature. I illustrate the consequences of misspecification of these network effects through a counterfactual simulation.

Original language	English
Pages (from-to)	450-470
Number of pages	21
Journal	Journal of Economic Behavior and Organization
Volume	209
Early online date	5 Apr 2023
DOIs	https://doi.org/10.1016/j.jebo.2023.03.022
Publication status	E-pub ahead of print - 5 Apr 2023

Bibliographical note

Funding Information:
☆ I would like to thank Ozlem Bedre-Defolie, Alessandro Iaria, Gregory Jolivet, Bruno Jullien, Andrew Rhodes, Marc Rysman, Helene Turon, and Frank Windmeijer, as well as the participants at seminars (University of Southampton and University of Groningen) and conferences (Bristol IO Workshop 2017, 2nd Economics of Platforms Workshop, EARIE 2018, and CRESS 2019) for useful discussions and suggestions. All errors are mine. This research did not receive any specific grant from funding agencies in the public, commercial, or not-for-profit sectors.

Publisher Copyright:
© 2023

Research Groups and Themes

ECON CEPS Data
ECON Econometrics

Access to Document

10.1016/j.jebo.2023.03.022Licence: CC BY

Handle.net

Persistent link

Cite this

@article{4a218443227142a6bf897ba77434245e,

title = "More is Better or Not? An Empirical Analysis of Buyer Preferences for Variety on the E-Market",

abstract = "This paper examines the effect of the number of sellers of a good on buyers{\textquoteright} demand, using an extensive dataset from an e-commerce platform (PriceMinister.com) in France. Accounting for seller and product characteristics constitutes variety amongst the same product. Although buyers may prefer a wide variety, it can introduce a search cost. Using a flexible semiparametric specification, I find that the demand of buyers does not monotonically increase in relation to the number of sellers (variety), contrary to assumptions in the literature. I illustrate the consequences of misspecification of these network effects through a counterfactual simulation.",

author = "Senay Sokullu",

note = "Funding Information: ☆ I would like to thank Ozlem Bedre-Defolie, Alessandro Iaria, Gregory Jolivet, Bruno Jullien, Andrew Rhodes, Marc Rysman, Helene Turon, and Frank Windmeijer, as well as the participants at seminars (University of Southampton and University of Groningen) and conferences (Bristol IO Workshop 2017, 2nd Economics of Platforms Workshop, EARIE 2018, and CRESS 2019) for useful discussions and suggestions. All errors are mine. This research did not receive any specific grant from funding agencies in the public, commercial, or not-for-profit sectors. Publisher Copyright: {\textcopyright} 2023",

year = "2023",

month = apr,

day = "5",

doi = "10.1016/j.jebo.2023.03.022",

language = "English",

volume = "209",

pages = "450--470",

journal = "Journal of Economic Behavior and Organization",

issn = "0167-2681",

publisher = "Elsevier",

}

TY - JOUR

T1 - More is Better or Not? An Empirical Analysis of Buyer Preferences for Variety on the E-Market

AU - Sokullu, Senay

N1 - Funding Information: ☆ I would like to thank Ozlem Bedre-Defolie, Alessandro Iaria, Gregory Jolivet, Bruno Jullien, Andrew Rhodes, Marc Rysman, Helene Turon, and Frank Windmeijer, as well as the participants at seminars (University of Southampton and University of Groningen) and conferences (Bristol IO Workshop 2017, 2nd Economics of Platforms Workshop, EARIE 2018, and CRESS 2019) for useful discussions and suggestions. All errors are mine. This research did not receive any specific grant from funding agencies in the public, commercial, or not-for-profit sectors. Publisher Copyright: © 2023

PY - 2023/4/5

Y1 - 2023/4/5

N2 - This paper examines the effect of the number of sellers of a good on buyers’ demand, using an extensive dataset from an e-commerce platform (PriceMinister.com) in France. Accounting for seller and product characteristics constitutes variety amongst the same product. Although buyers may prefer a wide variety, it can introduce a search cost. Using a flexible semiparametric specification, I find that the demand of buyers does not monotonically increase in relation to the number of sellers (variety), contrary to assumptions in the literature. I illustrate the consequences of misspecification of these network effects through a counterfactual simulation.

AB - This paper examines the effect of the number of sellers of a good on buyers’ demand, using an extensive dataset from an e-commerce platform (PriceMinister.com) in France. Accounting for seller and product characteristics constitutes variety amongst the same product. Although buyers may prefer a wide variety, it can introduce a search cost. Using a flexible semiparametric specification, I find that the demand of buyers does not monotonically increase in relation to the number of sellers (variety), contrary to assumptions in the literature. I illustrate the consequences of misspecification of these network effects through a counterfactual simulation.

U2 - 10.1016/j.jebo.2023.03.022

DO - 10.1016/j.jebo.2023.03.022

M3 - Article (Academic Journal)

SN - 0167-2681

VL - 209

SP - 450

EP - 470

JO - Journal of Economic Behavior and Organization

JF - Journal of Economic Behavior and Organization

ER -

More is Better or Not? An Empirical Analysis of Buyer Preferences for Variety on the E-Market

Abstract

Bibliographical note

Research Groups and Themes

Access to Document

Handle.net

Fingerprint

Cite this