Faculty of Economics and Business Administration Publications Database

Online Shopping and Platform Design with Ex Ante Registration Requirements

Münster, Johannes
ISSN-Print: 0025-1909
Link External Source: Online Version
Year: 2017
Keywords: E-commerce; Privacy concerns; Security concerns; Registration costs; Plattform design; Monopoly; Price competition; Information; Digital transformation
Abstract: We study platform design in online markets in which buying involves a (nonmonetary) cost for consumers caused by privacy and security concerns. Firms decide whether to require registration at their website before consumers learn relevant product information. We derive conditions under which a monopoly seller benefits from ex ante registration requirements and demonstrate that the profitability of registration requirements is increased when taking into account the prospect of future purchases or an informational value of consumer registration to the firm. Moreover, we consider the effectiveness of discounts (store credit) as a means to influence the consumers’ registration decision. Finally, we confirm the profitability of ex ante registration requirements in the presence of price competition.