Working Papers

Online Marketplace Advertising

Hana Choi and Carl F. Mela

May 14, 2018

This study examines the trade-off between advertising revenue and transaction revenue for online marketplaces. While charging a fee for sales encourages “web-rooming,” results suggest that lowering the cost-per-action (fees) and increasing the cost-per-consideration (clicks) yields a “win-win” outcome for the platform and its advertisers.

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