Implications of Priority Access in Markets with Experts: Evidence from Online Marketplace Lending.

Platform governance mechanisms such as market access control help to align all market players towards a specific value proposition. Our study focuses on understanding an important market access control mechanism: platform owners granting priority access to a subset of supply-side complementors to grow the marketplace and remove potential demand-side bottlenecks. We study the interplay between priority access and the variation in expertise of the complementors. Leveraging a randomized priority access given to expert institutional investors in online peer-topeer lending industry, we show that it creates negative spillover effect on the performance of crowd retail investors. We provide evidence in support of two mechanisms in driving the impact of priority access, the intensity of priority access and cream-skimming by institutional complementors, on the retail crowd market. [ABSTRACT FROM AUTHOR]