How digital platforms affect local entrepreneurial activities: Evidence from the staggered entry of craigslist

Abstract

Research SummaryAccess to markets is critical for entrepreneurial success, yet many face significant barriers. This study argues that digital platforms functioning as peer‐to‐peer marketplaces can facilitate entrepreneurial activity by improving market access for new ventures. Using the staggered entry of Craigslist into various markets, we find that Craigslist's entry increased local entrepreneurial activities, especially in low‐income regions. Moreover, individuals from lower‐income households, as well as Black and immigrant communities, were more likely to create new ventures following Craigslist's entry. Firms founded after Craigslist's entry were also smaller in size, potentially reflecting more efficient management, and primarily operated in B2C rather than B2B sectors. This study highlights how multisided platforms can empower individuals with limited market access and resources, ultimately democratizing entrepreneurship in the digital age.Managerial SummaryAccess to markets is essential for entrepreneurs to succeed, yet many face significant challenges in starting and growing their businesses. This study demonstrates how digital platforms like Craigslist can help overcome these barriers and create opportunities for more people to participate in entrepreneurship. When Craigslist expanded to new locations, it increased small business activity, particularly in low‐income areas. Individuals from lower‐income households, as well as Black and immigrant communities, were especially likely to benefit from it when starting businesses. These businesses were smaller in size, potentially indicating more efficient management and more B2C‐focused operations. This research underscores how digital platforms can make markets more accessible for traditionally disadvantaged groups, fostering a more inclusive entrepreneurial ecosystem.