Platform Competition under Asymmetric Information

Hanna Halaburda and Yaron Yehezkel

American Economic Journal: Microeconomics, 2013, vol. 5, issue 3, 22-68

Abstract: We consider platform competition in a two-sided market, where the two sides (buyers and sellers) have ex-ante uncertainty and ex-post asymmetric information concerning the value of a new technology. We fi nd that platform competition may lead to a market failure: competition may result in a lower level of trade and lower welfare than a monopoly, if the diff erence in the degree of asymmetric information between the two side is below a certain threshold. Multi-homing solves the market failure resulting from asymmetric information. However, if platforms can impose exclusive dealing, then they will do so, which results in market inefficiency.

JEL-codes: D41 D42 D82 D83 L11 L12 (search for similar items in EconPapers)
Date: 2013
Note: DOI: 10.1257/mic.5.3.22
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Citations: View citations in EconPapers (37)

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Working Paper: Platform Competition under Asymmetric Information (2011)
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