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arXiv · 1802.08778

Measuring the Demand Effects of Formal and Informal Communication : Evidence from Online Markets for Illicit Drugs

Luis Armona
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Abstract

I present evidence that communication between marketplace participants is an important influence on market demand. I find that consumer demand is approximately equally influenced by communication on both formal and informal networks- namely, product reviews and community forums. In addition, I find empirical evidence of a vendor's ability to commit to disclosure dampening the effect of communication on demand. I also find that product demand is more responsive to average customer sentiment as the number of messages grows, as may be expected in a Bayesian updating framework.

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Luis Armona. 2018-02-24. Measuring the Demand Effects of Formal and Informal Communication : Evidence from Online Markets for Illicit Drugs. https://arxiv.org/abs/1802.08778

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