“Sherlocking” and Platform Information Policy

Jay Pil Choi, Kyungmin Kim and Arijit Mukherjee

No 10769, CESifo Working Paper Series from CESifo

Abstract: Platform-run marketplaces may exploit third-party sellers’ data to develop competing products, but potential for future competition can deter sellers’ entry. We explore how this trade-off affects the platform’s referral fee and its own entry decision. We first characterize the platform’s optimal referral fee under full commitment on entry decision and study its economic implications. We then analyze the extent to which the platform’s own information sharing policy substitutes for its commitment to entry. We characterize the platform’s optimal information policy and examine how it interacts with the platform’s fee structure. Our findings highlight the importance of considering the platform’s fee structure as a regulatory response in the policy debates on marketplace regulation.

Keywords: hybrid platforms; referral fee; information design (search for similar items in EconPapers)
JEL-codes: D42 D82 L10 (search for similar items in EconPapers)
Date: 2023
New Economics Papers: this item is included in nep-com, nep-gth, nep-ind, nep-mic and nep-pay
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Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_10769

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