Marketplace Expansion Through Marquee Seller Adoption: Externalities and Reputation Implications
In the race to establish themselves, many early-stage online marketplaces choose to accelerate their growth by adding marquee (established brand name) sellers. We study the implications of marquee seller entry on smaller, unbranded sellers in a marketplace when both unbranded sellers and marquee sellers can vary vertically across reputation (referred to as sellers’ quality). While recent literature has shown that higher-quality unbranded sellers fare better than their lower-quality peers, we posit that this may not hold for entrants of any quality.