Strategic Release of Information in Platforms: Entry, Competition, and Welfare

Kostas Bimpikis () and Giacomo Mantegazza ()
Additional contact information
Kostas Bimpikis: Graduate School of Business, Stanford University, Stanford, California 94305
Giacomo Mantegazza: Graduate School of Business, Stanford University, Stanford, California 94305

Operations Research, 2023, vol. 71, issue 5, 1619-1635

Abstract: Two-sided platforms play an important role in reducing frictions and facilitating trade, and in doing so they increasingly engage in collecting and processing data about supply and demand. This paper establishes that platforms have an incentive to strategically disclose (coarse) information about demand to the supply side, as this can considerably boost their profits. However, this practice may also adversely affect the welfare of consumers. By optimally designing its information disclosure policy, a platform can influence the entry and pricing decisions of its potential suppliers. In general, it is optimal for the platform to disclose its information only partially to either “nudge” entry when it is a priori costly for suppliers to join or, conversely, discourage it when suppliers do not have access to attractive outside options. On the other hand, consumers may end up being worse off, as they have access to fewer trading options and/or face higher prices compared with when the platform refrains from sharing any demand information to its potential suppliers.

Keywords: Revenue Management and Market Analytics; two-sided platforms; information design; competition; consumers welfare (search for similar items in EconPapers)
Date: 2023
References: Add references at CitEc
Citations:

Downloads: (external link)
http://dx.doi.org/10.1287/opre.2022.2402 (application/pdf)

Related works:
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: https://EconPapers.repec.org/RePEc:inm:oropre:v:71:y:2023:i:5:p:1619-1635

Access Statistics for this article

More articles in Operations Research from INFORMS Contact information at EDIRC.
Bibliographic data for series maintained by Chris Asher ().