E-commerce, two-sided markets and info-mediation

Alexandre Gaudeul and Bruno JULLIEN ()

Industrial Organization from EconWPA

Abstract: Participants in a market, buyers and sellers, may need the service of an intermediary who will put them into contact and give them information about their potential trading partner. The intermediary chooses what price it will charge to each side to have access to its service. It also chooses what information it will reveal, for example to the buyer about the value of the seller’s product. In a market with network externalities, it would be optimal that everybody had access to the other side, as each side wants as many agents from the other side to be present as possible. This is however not feasible as the intermediary must charge positive access prices if it is to make any profit. In a market with asymmetric information, it would be optimal that all information about the buyers’ and sellers’ valuation for the traded product be available, but the intermediary will want to conceal or manipulate that information to increase its profit. The paper examines in the first part how network externalities play out in the intermediary’s access pricing strategies in both a monopoly and a competitive setting. In the second part, the paper shows how the intermediary will strategically manipulate and conceal information to extract the surplus from trade in the market it intermediates.

Keywords: Intermediation; internet; asymmetric information; information goods; network effects; two sided markets; matching. (search for similar items in EconPapers)
JEL-codes: D4 L1 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-ind, nep-ino, nep-mic and nep-net
Date: 2005-03-31, Revised 2005-04-05
Note: Type of Document - pdf; pages: 30
View list of references

Downloads: (external link)
http://129.3.20.41/eps/io/papers/0503/0503014.pdf (application/pdf)

Related works:
Working Paper: E-Commerce, Two-Sided Markets and Info-Mediation (2005)
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: http://EconPapers.repec.org/RePEc:wpa:wuwpio:0503014

Access Statistics for this paper

More papers in Industrial Organization from EconWPA
Series data maintained by EconWPA ().