The Ripple Effect of Platform Quality Controls in a Submarket: Evidence from a Secondhand Marketplace

Digital platforms increasingly engage in quality controls by regulating product listings and transactions. Although their immediate effect on the involved sellers is evident, their carryover effect on adopters and their spillover effect on nonadopters remain unclear. We address this gap using a natural experiment on a secondhand platform. The platform introduced a submarket with quality controls in the mobile phone category. The submarket offers quality checks, detailed quality reports, standardized listing information, recommended prices, post-purchase guarantees, and free delivery. We find that the quality-controlled submarket not only immediately increases adopters’ sales but also has a positive carryover effect. After adopting, sellers learn from the platform’s quality standards and improve their subsequent listing behaviors and sales performance, even outside the quality-controlled submarket. Moreover, we uncover a U-shaped effect for nonadopters; when the adoption rate is low, nonadopters are disadvantaged because of intensified competition from adopters; however, as adoption increases, they benefit from enhanced buyer perception of platform quality. The competition effect and the perception improvement effect dominate at different stages of adoption. These findings have important implications for platform strategies and policies concerning anticompetitive effects of platform quality controls.

History: Catherine Tucker served as the senior editor for this article.

Funding: This work was supported by the General Research Fund [Grant 17500224] of the Hong Kong Research Grants Council and the National Natural Science Foundation of China [Grant 72595863]. All authors certify that they have no affiliations with or involvement in any organization or entity with any financial interest or nonfinancial interest in the subject matter or materials discussed in this article.

Supplemental Material: The online appendix and data files are available at https://doi.org/10.1287/mksc.2024.1228.