Platform Credit and E-Commerce Market Structure

As transaction and data hubs, e-commerce platforms are uniquely positioned to extend credit to users and have become leading players in FinTech. This paper provides the first evidence on how platform credit shapes the e-commerce market structure. Using data from Alibaba, Huang et al. (2018) estimate the causal effects of platform credit on the allocation of customer attention, and as a result, the sales distribution of e commerce merchants. They find that platform credit amplifies the selection of merchants by customers, and thereby, can contribute to platform prosperity especially through the cross-side externality.