The Impact of Platform Protection Insurance on Buyers and Sellers in the Sharing Economy: A Natural Experiment

Abstract

The sharing economy has radically reshaped marketing thought and practice, and research has yet to examine whether and how platform-level buyer protection insurance (PPI) affects buyers and sellers in this economy. The authors exploit a natural experiment involving an unexpected system glitch during a PPI launch and estimate difference-in-differences models using over 5.4 million data points from a food sharing platform. Results suggest that PPI significantly increases buyer spending and seller revenue, affirming the benefits of this platform-level insurance in the sharing economy. The authors also uncover multifaceted buyer-side and seller-side responses that enable such benefits. PPI increases buyer spending by boosting product orders and variety-seeking behavior. Furthermore, it enhances seller revenue by increasing customer retention and acquisition. This work contributes to the literature by (1) putting a spotlight on the topic of PPI, a platform governance policy that reduces consumer risks and improves the efficacy of sharing platforms; (2) accounting for how PPI alters buyer and seller behaviors on a platform; (3) addressing what types of buyers and sellers benefit more or less from PPI; and (4) offering guidance for managers to improve platform reputation, marketplace efficiency, and consumer welfare in the context of the sharing economy.

Cite this work

No public copy is stored for this record, so only the metadata is cited.

Stored only when both papers are in the corpus — 82 citations exist upstream.

Papers that cite the same references — the relational fallback while embeddings are still backfilling.