Matching & Information Provision by One-Sided and Two-Sided Platforms
This paper studies a "market creating" firm (platform) that offers a matching environment by charging an access fee to a population of high and low type users who wish to form a match. We focus on an environment where users only observe a signal of their randomly assigned partner's type and where the informativeness of the signal is controlled by the firm. We study how both tools, access fee and signal informativeness, can be used to screen particular segments of the population. We finish by characterizing the set of optimal menus. The paper proposes three results. We show that information provision has a screening role when network effects are heterogeneous because a platform cannot induce every level of participation using only the access fee. Secondly, any platform will optimally offer a menu such that only high types participate, or where every user participates. In the former the signal is perfectly informative; in the latter it is partially informative. Lastly, the profit maximizing firm will over-provide information in relation to the surplus maximizing firm, and the higher the heterogeneity in the population, the higher the chance of the optimal menu excluding low type users.
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- White, Alexander, 2013. "Search engines: Left side quality versus right side profits," International Journal of Industrial Organization, Elsevier, vol. 31(6), pages 690-701.
- Ettore Damiano & Hao Li, 2007.
"Price discrimination and efficient matching,"
Springer;Society for the Advancement of Economic Theory (SAET), vol. 30(2), pages 243-263, February.
- Justin P. Johnson & David P. Myatt, 2006.
"On the Simple Economics of Advertising, Marketing, and Product Design,"
American Economic Review,
American Economic Association, vol. 96(3), pages 756-784, June.
- David P. Myatt & Justin P. Johnson, 2004. "On the Simple Economics of Advertising, Marketing, and Product Design," Economics Series Working Papers 185, University of Oxford, Department of Economics.
- Andrei Hagiu & Bruno Jullien, 2011. "Why do intermediaries divert search?," RAND Journal of Economics, RAND Corporation, vol. 42(2), pages 337-362, 06.
- Poeschel, Friedrich, 2012.
"Assortative matching through signals,"
IAB Discussion Paper
201215, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
- Poeschel, Friedrich, 2012. "Assortative matching through signals," Annual Conference 2012 (Goettingen): New Approaches and Challenges for the Labor Market of the 21st Century 62061, Verein für Socialpolitik / German Economic Association.
- Friedrich Poeschel, 2013. "Assortative matching through signals," SFB 649 Discussion Papers SFB649DP2013-044, Sonderforschungsbereich 649, Humboldt University, Berlin, Germany.
- Friedrich Poeschel, 2013. "Assortative matching through signals," 2013 Papers ppo178, Job Market Papers.
- Andre Veiga & E. Glen Weyl, 2011. "Multidimensional Heterogeneity and Platform Design," Working Papers 11-33, NET Institute, revised Nov 2011.
- Alp E. Atakan, 2006.
"Assortative Matching with Explicit Search Costs,"
Econometric Society, vol. 74(3), pages 667-680, 05.
- Juan-José Ganuza & José S. Penalva Zuasti, 2005. "On Information And Competition In Private Value Auctions," Working Papers wp2005_0503, CEMFI.
- Mark Armstrong, 2006.
"Competition in two‐sided markets,"
RAND Journal of Economics,
RAND Corporation, vol. 37(3), pages 668-691, 09.
- Chade, Hector, 2006. "Matching with noise and the acceptance curse," Journal of Economic Theory, Elsevier, vol. 129(1), pages 81-113, July.
- Alp E. Atakan, 2010. "Efficient Dynamic Matching with Costly Search," Koç University-TUSIAD Economic Research Forum Working Papers 1030, Koc University-TUSIAD Economic Research Forum.
- Juan José Ganuza & José S. Penalva, 2006. "On information and competition in private value auctions," Economics Working Papers 937, Department of Economics and Business, Universitat Pompeu Fabra, revised Jul 2006.
When requesting a correction, please mention this item's handle: RePEc:net:wpaper:1120. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Nicholas Economides)
If references are entirely missing, you can add them using this form.