Matching & Information Provision by One-Sided and Two-Sided Platforms

Carlos Canon ()
Additional contact information
Carlos Canon: Toulouse School of Economics, http://www.carloscanon.com

No 11-20, Working Papers from NET Institute

Abstract: 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.

Keywords: Pricing; Market Design; Matching; Information Provision; Heterogeneous Network Effects (search for similar items in EconPapers)
JEL-codes: D42 D83 L11 L15 (search for similar items in EconPapers)
Pages: 58 pages
Date: 2011-09, Revised 2011-10
New Economics Papers: this item is included in nep-com, nep-cta, nep-gth, nep-ind and nep-net
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://www.netinst.org/Canon_11_20.pdf (application/pdf)
no

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:net:wpaper:1120

Access Statistics for this paper

More papers in Working Papers from NET Institute
Bibliographic data for series maintained by Nicholas Economides ().