Online Shopping and Platform Design with Ex Ante Registration Requirements

We study platform design in online markets in which buying involves a (non-monetary) cost for consumers caused by privacy and security concerns. Firms decide whether to require registration at their website before consumers learn the price and all relevant product information. We show that a monopoly seller requires ex ante registration in equilibrium if and only if the consumersÂ’registration cost is sufficiently low. This result extends to the case of price competition. We also show that discounts (store credit) can increase the share of consumers who register and hence a firm's profit even though discounts affect the equilibrium price.