The widespread expansion of online markets in the past decade poses several questions for platforms, firms and customers alike. An important dimension to be explored in this domain is the provision of information on e-commerce platforms - given the increasing ease with which product pages can be customized to include a vast variety of content, how do these pieces of information interact? Further, what are the specific channels through which this information eventually influences consumer decision-making? My dissertation is situated in this space, and aims to look at how consumers respond to various “cues” that are being introduced by e-commerce platforms which offer products or services that can be purchased online, and how these cues might eventually influence decision-making. In my first dissertation project, the cue I focus on is user generated content. More specifically, I study how the introduction of the Q&A technology (which enables customers to ask product-specific questions before purchase, and receive answers either from other customers or the platform itself) affects the more widely established reviews and ratings feature on e-commerce platforms. I find that the addition of Q&As leads to better matches between customers and products, higher customer satisfaction, and resultantly higher ratings. My second project examines another cue that is common in online markets, which is the advertised reference price. My goal in this project is to examine how users react to a specific variant of such prices, namely the “Starting from...” price, using data from a large scale field experiment conducted on Holidu.com. My results indicate that raising “From” prices gives users a more accurate price estimate, but it negatively impacts outbound clicks and other engagement metrics. Taken together, the two projects aim to shed light on factors that influence consumer decision-making in an e-commerce setting, and the possible mechanisms underlying this influence.

In this thesis, we use methods from econometrics to empirically measure and quantify how digital information influences industries and markets. Specifically, we focus on two important areas of marketing: online reputation management, and competition between online and offline markets. In the first part of the thesis, we study the impact of management review responses, a popular reputation management mechanism, on consumer ratings. To do so, we exploit a difference in managerial practice across two hotel review plat- forms, TripAdvisor and Expedia: while hotels regularly respond to their TripAdvisor reviews, they never do so on Expedia. Based on this observation we employ a “difference-in-differences” design to identify the causal impact of management responses on ratings, and show that responding hotels see an average increase of 0.1 stars. We then turn to analyze the mechanisms behind this increase in ratings and show that by responding to reviews, hotels attract consumers who are inherently more positive, and therefore more likely to leave good reviews. In the second part of the thesis, we study peer-to-peer markets and their impact on traditional industries. We do so by looking at Airbnb, a sharing economy pioneer offering short-term accommodation. We combine data from Airbnb and the Texas hotel industry, and estimate the impact of Airbnb’s entry into the Texas market on hotel room revenue. To identify Airbnb’s causal impact on hotel room revenue, we use a “difference-in-differences” empirical strategy that exploits the significant spatiotemporal variation in the patterns of Airbnb adoption across city-level markets. We estimate that in Austin, where Airbnb supply is highest, the impact on hotel revenue is roughly 8-10% for the most affected hotels. Further, we find that affected hotels have responded by reducing prices, an impact that benefits all consumers, not just participants in the sharing economy. The results presented in this thesis have practical implications for firms seeking to improve their operations and marketing strategies, platforms seeking to design better and efficient marketplaces, and consumers who are often not aware of important dynamics that can be helpful in their decision-making process.

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<p>This dissertation consists of three chapters relating to various topics in empirical Industrial Organization. The first two chapters deal with the empirical treatment of sales in online markets. The third chapter explores the level of pass-through for taxes on soft drinks.</p><p>In the first chapter I demonstrate that when dealing with online market places it is important to take into account the fact that multiple listings coexist. Traditionally, the economic literature has treated listings as independent. In reality, however, buyers often have the choice between multiple contemporaneous listings. I demonstrate that it is important to take this fact into account since sellers who list their items simultaneously are in direct competition. More specifically, I show that the sale probability of a given item decreases when the number of simultaneous listings increases. Thus, the aforementioned assumption of independence can lead to wrong results.</p><p>In the second chapter, I specify and estimate a structural model of mechanism choice in online markets. I consider both sides of the market: On the demand side, buyers' choices among available listings are equilibrium outcomes of an entry game. On the supply side, sellers take competition into account and make equilibrium decisions when choosing sales mechanisms and prices. I estimate this model using data from sales of baseball tickets on eBay. I find that sellers' outside options, dynamic incentives, and risk preferences affect mechanism choice. Using the estimation results from my model I analyze the welfare effects of a hybrid mechanism (buy-it-now auctions) eBay offers. I find that the existence of buy-it-now auctions increases the consumer surplus and reduces the producer surplus. The reason for this is that buy-it-now auctions diminish sellers' potential for diversification via mechanism choice and thus strengthen competition.</p><p>The third and last chapter focuses on the incidence of soda taxes by studying the pass-through level of these taxes. It lays out a framework for thinking about the determinants of the pass-through level. More specifically, it builds theoretical models that examine the pass-through under more complex supply structures with multiple manufactures and retailers. In addition to providing some intuition behind theoretical predictions of the models, this chapter also presents empirical results found in the data along with their implications.</p> / Dissertation