25 May 2022 at 13:00

By: Senay Sokullu, Senior Lecturer in Economics, School of Economics, University of Bristol

More Is Better – Or Not? An Empirical Analysis of Buyer Preferences for Variety on the E-Market

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 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, Senay find that the demand of buyers does not monotonically increase in relation to the number of sellers (variety), contrary to assumptions in the literature. Senay illustrates the consequences of misspecification of these network effects through a counterfactual simulation.

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