Felipe Kup Barbieri de Matos and Aviv Nevo, Economics, University of Pennsylvania
Abstract: The main aim of this project is to understand how online aggregators such as TripAdvisor or Yelp have impacted competition in the restaurant market, and whether and how much they have benefited consumers. Is it the case that older incumbent restaurants located in high foot traffic area have lost market power compared to younger and more innovative restaurants located in less frequented neighborhoods? Or instead, do online review aggregators benefit older, financially well-endowed restaurants since they have more resources to engage in better customer research? This project also aims to evaluate which consumers capture most of the welfare gains from these technological advances. Are markets in suburban and rural areas affected by this technological innovation? Do center city-dwellers capture most of the welfare gains? Are the gains in cities concentrated among high-income individuals? Given lower search costs, are restaurants catering more to (now better informed) tourists, compared to locals?