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Dominik Gutt, Assistant Professor of Business Information Management, Erasmus University Rotterdam.
Title: Do Non-Fungible Tokens (NFTs) Affect Prices of Physical Products? Evidence from Trading Card Collectibles
Abstract: Since the beginning of 2021, non-fungible tokens (NFTs) have gathered considerable attention. The introduction of NFTs and the high prices that many have been auctioned off for raise the question how the introduction of NFTs affect the prices of their physical counterparts. In this work, we use data from eBay to evaluate how the prices of basketball trading card collectibles are affected by the introduction of a related NFT market named "NBA Top Shot". We find that the introduction of NFT collectibles causes the prices of physical collectibles to decline by 5.2% (US$ 27.7). By applying a natural language processing model, we identify the player and the year that each card refers to and we find evidence suggesting the presence of a substitution effect: The introduction of NFTs of currently-active players reduces the prices of physical cards of currently-active but not of retired players, while the substitution effect even extends to currently active players without NFTs. We study each agent's (buyers and sellers) reaction to the introduction of NFTs and we find that buyers' willingness to pay drops by 10.3% and sellers' reservation prices decrease by 5%. Further analyses suggest that our results are driven by a technology rather than an attention effect, while we estimate how key NFT market characteristics (consistent physical quality of goods, "built-in" reputation, and digital scarcity of goods) shape the impact of NFTs on the market of physical collectibles. Lastly, we calculate the economic implications for marketplaces of physical collectibles, conduct various tests to validate our identification strategy using multiple data sets, and discuss how we contribute to the literature and management.
Bio: Dominik Gutt is Assistant Professor of Business Information Management at the Department of Technology and Operations Management at Rotterdam School of Management, Erasmus University. He obtained his PhD from Paderborn University in May 2019 and joined RSM in September 2019.
Dominik’s main research interests lie in Smart Services (e.g., Smart Contract NFTs and Smart Conversational Agents) and user-generated content (e.g., electronic word-of-mouth or peer-to-peer video streams). Currently, Dominik is mainly teaching economics of digital markets, research methods for IS students (in particular, econometrics), and web scraping.
His work has been published in well-reputed peer-reviewed journals including Information Systems Research. His work has also been presented at leading Information Systems and Economics conferences including the National Bureau of Economic Research (NBER) Summer Institute and the Conference on Information Systems and Technology (CIST).