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Information Shock and Scale Effect on Digital Platforms: Evidence from the Housing Market

Author

Listed:
  • Ping Cheng
  • Walter DLima
  • Zhenguo Lin
  • Liuming Yang

Abstract

This study examines the impact of an information shock on the listing outcomes of digital trading platforms. It reports a unique case of the suspension of a data sharing agreement between two Multiple Listing Services (MLSs) in South Florida, and investigates the impact of such a (negative) information shock on the economic outcomes of the MLS trading platforms. The paper first develops a theoretical model involving search and matching frictions, which predicts discounted trading prices being correlated to the degree of cross-MLS brokers’ collaboration. Using data involving property listings from the two MLSs, the paper then conducts a series of regression analyses and find that there is approximately a 3% price reduction during the data suspension period. This result confirms the model’s theoretical predictions, and remains stable and consistent under various robustness checks. Our results also reveal heterogeneous pricing and liquidity effects due to such an information shock. The findings of this study has implications for competing platforms that share information.

Suggested Citation

  • Ping Cheng & Walter DLima & Zhenguo Lin & Liuming Yang, 2024. "Information Shock and Scale Effect on Digital Platforms: Evidence from the Housing Market," ERES eres2024-177, European Real Estate Society (ERES).
    • Handle: RePEc:arz:wpaper:eres2024-177
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    More about this item

    Keywords

    digital platforms; Information sharing; multiple listing services; Search frictions;
    All these keywords.

    JEL classification:

    • R3 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location

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