Abstract
ABSTRACT Two-sided digital platforms play an increasingly important role in our economy. During the COVID-19 pandemic, our involvement with these platforms increases drastically, but little is known about how the behavior of consumers and the labor market performance of workers in a two-sided market are affected by an economy-wide shock. This article uses a unique real-time dataset from a live-streaming platform to investigate how virtual gifting of fans and live e-commerce decisions and sales of anchors are influenced by COVID-19. Our general quantile regression approach suggests that the pandemic severity on the fans side instead of the anchors side increases virtual gifting to low-paying anchors, consistent with our theoretical prediction. In addition to the prices adjusted by the platform, we also find user participation and gender potential mechanisms through which COVID-19 affects virtual gifting. Due to increased popularity caused by the pandemic, low-paying anchors conduct more live e-commerce and achieve higher sales. Our results document the de-polarization of a novel and emerging labor market with flexible workforce on a digital platform and emphasize the need to take market structures into account when studying the impact of demand shocks.
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