'Information doesn't want to be free': informational shocks with anonymous online platforms

Amedeo Piolatto

No 2020/08, Working Papers from Institut d'Economia de Barcelona (IEB)

Abstract: Anonymous information platforms (e.g. Airbnb) provide information about experience goods while keeping agents' identity hidden until the transaction is completed. In doing so, they generate heterogeneity in the information levels across consumers. In this paper, I show that such platforms induce a weak increase of offline prices and that only low-valuation goods are cheaper online than offline. Platforms always lead to an increase in profits. In terms of consumer welfare, the platform equilibrium is Pareto superior for low-and high-valuation goods, while for intermediate ranges some buyers benefit while others lose from the presence of the platform.

Keywords: Anonymous information platforms; experience goods; mismatch costs; Spokes model; horizontal competition (search for similar items in EconPapers)
JEL-codes: D02 D21 D43 D61 D83 L11 L13 L15 (search for similar items in EconPapers)
Pages: 36 pages
Date: 2020
New Economics Papers: this item is included in nep-com, nep-ind, nep-ore and nep-pay
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https://ieb.ub.edu/publication/2020-08-information ... us-online-platforms/ (application/pdf)

Related works:
Working Paper: `Information Doesn't Want to Be Free': Informational Shocks with Anonymous Online Platforms (2020)
Working Paper: Online booking and information: competition and welfare consequences of review aggregators (2015)
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Persistent link: https://EconPapers.repec.org/RePEc:ieb:wpaper:doc2020-08

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