Online Appendix

Suppose that we have a continuum of consumer types, and each consumer is indexed by the convenience benefit b obtained from performing transactions through M . We assume b ∈ [bL, bH ] is distributed with cdf G (.) and corresponding log-concave density g (.), where bL ≥ −∞ and bH ≤ ∞. Everything else is like in the baseline model. We assume the gap bH − bL is large enough so that equilibrium prices are always interior.