The Value of User-Specific Information for Two-Sided Matchmakers

Tim Brühn, Annette Meinusch and Georg Götz
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Tim Brühn: University of Giessen
Annette Meinusch: University of Giessen
Georg Götz: University of Giessen
Authors registered in the RePEc Author Service: Georg Götz

MAGKS Papers on Economics from Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung)

Abstract: This paper analyzes the incentives of a monopolistic matchmaker to generate user-specific information in order to increase match-quality and profits. By merging two-sided-markets with two-sided-matching we derive a micro-foundation of cross-side externalities dependent on the number of potential matches and the accuracy-level of user-specific information. Incentives to invest into identification technologies are determined by the scalability of the (fixed) investments and the resulting effect on match-quality. We show that these effects work into opposing directions, i.e., while scalability works in favor for platforms with large customer bases, the effect of identification on match-quality is greater for small scale platforms.

Keywords: two-sided markets; two-sided matching; advertising; segmentation and identification (search for similar items in EconPapers)
Date: 2014
New Economics Papers: this item is included in nep-mic, nep-mkt and nep-net
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Persistent link: https://EconPapers.repec.org/RePEc:mar:magkse:201448

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