Design and Operations on the Supply Side of Online Marketplaces

Abstract

Online platforms like eBay, Upwork, Airbnb, and Uber have transformed their markets, and many more are about to emerge. The rise of platforms has become one of the predominant economic and social developments of our time. Moreover, it has created many opportunities and challenges for both practitioners and researchers. My dissertation focuses on the design and operations on the supply side of online marketplaces. In particular, I study supply-side levers (e.g., listing policy and information provision policy) in different marketplace context (e.g., auction marketplace and service platform), with the consideration of strategic behavior of market participants and various friction involved in transactions (e.g., participation cost, information asymmetry, and supply adjustment friction). The first essay investigates how a one-sided liquidation auction marketplace maximizes its revenue by managing the supply-side market thickness under an exogenous supply inflow. The second essay examines the operational impacts of service platforms’ information disclosure regarding service providers’ qualities and revealing their mechanisms. The last essay studies whether two-sided marketplaces benefit or suffer from sellers’ quantity competition under unanticipated demand shocks. We further show that marketplaces can maneuver the competition in favorable directions by manipulating the supply adjustment friction. Overall, the findings from the three essays show that marketplaces’ operational levers on the supply side have significant effects on the strategies of all participants, which impacts the marketplaces’ operational performance. The dissertation offers both theoretical insights on the mechanisms of the studied supply-side levers and practical implications on how these levers should be designed and implemented.