Towards Efficient Information Sharing in Network Markets

Proceedings of the 57th Hawaii International Conference on System Sciences 2024

10 Pages Posted: 3 Nov 2021 Last revised: 29 Feb 2024

See all articles by Bertin Martens

Bertin Martens

Tilburg Law and Economics Center (TILEC); Bruegel

Geoffrey Parker

Dartmouth College

Georgios Petropoulos

Massachusetts Institute of Technology (MIT); Stanford University

Marshall W. Van Alstyne

Boston University - Department of Management Information Systems; Massachusetts Institute of Technology (MIT) - Sloan School

Multiple version iconThere are 2 versions of this paper

Date Written: January 3, 2024

Abstract

This paper develops a Salop differentiation model to study private and social incentives to share information within a platform ecosystem, between a platform intermediary and its business users. Information sharing can help business users to make more efficient decisions around their market and product innovation strategies improving social welfare. However, private and social incentives for information sharing do not coincide when the platform intermediary is vertically integrated and competes directly with its business users in the upstream market of the platform market. So, there is a scope for an \emph{ex-ante} regulation of mandatory data sharing. We argue that the location of data access matters and propose a regulatory framework that introduces a new data right for platform users, the \emph{in-situ} data right, which is associated with positive welfare gains. By construction, this right enables effective information sharing, together with its context, without reducing the value created by network effects. We discuss crucial elements of its implementation in order to achieve innovation-friendly and competitive digital markets.

Keywords: Information sharing, data rights, digital platforms, market failure, in-situ, algorithms, data portability

JEL Classification: D47, D82, K21, L21, L22, L40, L41, L43, L51, L86

Suggested Citation

Martens, Bertin and Parker, Geoffrey and Petropoulos, Georgios and Van Alstyne, Marshall W., Towards Efficient Information Sharing in Network Markets (January 3, 2024). Proceedings of the 57th Hawaii International Conference on System Sciences 2024, Available at SSRN: https://ssrn.com/abstract=3954932 or http://dx.doi.org/10.2139/ssrn.3954932

Bertin Martens

Tilburg Law and Economics Center (TILEC) ( email )

Warandelaan 2
Tilburg, 5000 LE
Netherlands

Bruegel ( email )

Rue de la Charité 33
B-1210 Brussels Belgium, 1210
Belgium

Geoffrey Parker

Dartmouth College ( email )

School of Engineering
Hanover, NH 03755
United States
603-646-9075 (Phone)

HOME PAGE: http://engineering.dartmouth.edu/people/faculty/geoffrey-parker

Georgios Petropoulos (Contact Author)

Massachusetts Institute of Technology (MIT) ( email )

77 Massachusetts Avenue
50 Memorial Drive
Cambridge, MA 02139-4307
United States

Stanford University ( email )

Stanford, CA 94305
United States

Marshall W. Van Alstyne

Boston University - Department of Management Information Systems ( email )

595 Commonwealth Avenue
Boston, MA 02215
United States
617-358-3571 (Phone)

HOME PAGE: http://questromapps.bu.edu/mgmt_new/Profiles/VanAlstyneMarshall.html

Massachusetts Institute of Technology (MIT) - Sloan School ( email )

Initiative on the Digital Economy
245 First St, Room E94-1521
Cambridge, MA 02142
United States
617-253-0768 (Phone)

HOME PAGE: http://web.mit.edu/marshall/www/home.html

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