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

Alexandre Gaudeul and Bruno Jullien

Industrial Organization from University Library of Munich, Germany

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)
Pages: 30 pages
Date: 2005-03-31, Revised 2005-04-05
New Economics Papers: this item is included in nep-ind, nep-ino, nep-mic and nep-net
Note: Type of Document - pdf; pages: 30
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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

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