Abstract

https://ssrn.com/abstract=1758831
 
 

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Platform Competition Under Asymmetric Information


Hanna Halaburda


Bank of Canada; New York University (NYU); CESifo Institute

Yaron Yehezkel


Faculty of Management, Tel-Aviv University

October 17, 2012

Harvard Business School Strategy Unit Working Paper No. 11-080

Abstract:     
We consider platform competition in a two-sided market, where the two sides (buyers and sellers) have ex-ante uncertainty and ex-post asymmetric information concerning the value of a new technology. We find that platform competition may lead to a market failure: competition may result in a lower level of trade and lower welfare than a monopoly, if the difference in the degree of asymmetric information between the two side is below a certain threshold. Multi-homing solves the market failure resulting from asymmetric information. However, if platforms can impose exclusive dealing, then they will do so, which results in market inefficiency.

Number of Pages in PDF File: 49

Keywords: symmetric information, platform competition, exclusive dealing

JEL Classification: L15, L41


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Date posted: February 10, 2011 ; Last revised: September 9, 2016

Suggested Citation

Halaburda, Hanna and Yehezkel, Yaron, Platform Competition Under Asymmetric Information (October 17, 2012). Harvard Business School Strategy Unit Working Paper No. 11-080. Available at SSRN: https://ssrn.com/abstract=1758831 or http://dx.doi.org/10.2139/ssrn.1758831

Contact Information

Hanna Halaburda (Contact Author)
Bank of Canada ( email )
234 Wellington Street
Ontario, Ottawa K1A 0G9
Canada
New York University (NYU) ( email )
Bobst Library, E-resource Acquisitions
20 Cooper Square 3rd Floor
New York, NY 10003-711
United States
CESifo Institute ( email )
Munich
Germany
Yaron Yehezkel
Faculty of Management, Tel-Aviv University ( email )
Ramat Aviv
Tel Aviv, 69978
Israel
HOME PAGE: http://www.tau.ac.il/~yehezkel/
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