Market Design Choices, Racial Discrimination, and Equitable Micro-Entrepreneurship in Digital Marketplaces
Amid recent calls for equity, many tech firms have initiated policies to provide monetary and educational support for minority entrepreneurs on their platforms. These firms' digital platforms also have mechanism design choices at their disposal to augment such efforts and further promote equitable outcomes for minority entrepreneurs. In this paper, we examine the potential for a digital platform to promote equitable outcomes by utilizing platform certification to provide a clearly identifiable signal of high quality micro-entrepreneurs. In particular, platform certification can promote equitable outcomes by separating individual quality from any group-level prejudice attributed to the members of a group. Exploiting the discontinuity in Airbnb's assignment of platform certification (Superhost program), we utilize a Regression Discontinuity Design (RDD) to assess the potential for Airbnb's Superhost program to alleviate discrimination faced by minority Airbnb hosts across ten large U.S. cities. Our estimates document the disproportionate benefit of the Superhost status for Black Airbnb hosts---1.5 to 2 times more than other Airbnb hosts, establishing its effectiveness in reducing discrimination and promoting equitable outcomes. We exploit the richness of our data using the doubly-robust machine learning approach to generalize our findings beyond the marginal set of hosts we examined in the RDD setup. We also find that the effectiveness of the platform certification in reducing discrimination continues to hold even in the presence of consumer reviews, which are a credible user-generated quality signal. Judicious use of market design features thus holds significant promise in promoting equitable outcomes for minority entrepreneurs