Seller Organization and Percentage Fee Design in the Daily Deal Market

The prosperity of the daily deal business has attracted more sellers to participate in daily deal campaigns with offering discounted deals via online platforms like Groupon and Juhuasuan. This gives rise to a new challenge for online platforms on how to efficiently organize a limited number of sellers to conduct daily deal campaigns. Our paper makes the first attempt to understand how different seller organization formats can influence the firms’ equilibrium strategies and profits in the daily deal market. We focus on two prevalent seller organization formats. (1) The seller agglomeration strategy: the platform (e.g., Groupon) does not distinguish the sellers’ type in each round of the campaign. (2) The seller segmentation strategy: the platform (e.g., Juhuasuan) organizes sellers of the same type in each round. Comparing to the agglomeration strategy, we show that the segmentation strategy can eliminate internal information asymmetry among competing sellers and thus can improve the sellers’ pricing efficiency and facilitate the platform to charge a higher percentage fee. This uncovers the value of seller segmentation and theoretically explains why platforms should carefully segmentate sellers in daily deal campaigns, although considerable efforts are required to enroll sellers.

Newspaper Censorship in China: Evidence from Tunneling Scandals

Media dissemination plays an important role in facilitating price discovery. Political pressure that restricts media dissemination can hinder this function and affect investors’ perceptions. This paper studies the magnitude of newspaper censorship in China and its economic consequences using a setting of tunneling scandals. We find significant evidence of censorship of tunneling-related negative news at the national and local levels. We further show that news that survives censorship reduces information asymmetry and improves pricing efficiency. Censorship blocks informative tunneling news and delays incorporation of tunneling reporting into prices. This paper was accepted by Brian Bushee, accounting.