Quality screening and information disclosure in two-sided markets

Jin Wang

Economics Letters, 2018, vol. 171, issue C, 183-188

Abstract: This paper studies how a platform can use quality screening to alleviate the asymmetric information problem between users on the two sides. We consider two screening mechanisms through which a platform communicates the quality information from one side to the other: minimum threshold and multiple thresholds. For each mechanism, we derive the equilibrium outcome and conduct welfare analysis. It shows that the optimal screening rule is determined by the magnitude (or the distribution) of the cross-group externalities and the operation cost of the platform.

Keywords: Two-sided market; Quality screening; Minimum threshold; Multiple thresholds (search for similar items in EconPapers)
JEL-codes: D42 L11 L12 L15 (search for similar items in EconPapers)
Date: 2018
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:171:y:2018:i:c:p:183-188

DOI: 10.1016/j.econlet.2018.07.034

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