Search Steering in Two-Sided Platforms

23 Pages Posted: 31 May 2022

See all articles by Pedro Vaissman Guinsburg

Pedro Vaissman Guinsburg

FEA-USP (Sao Paulo University)

Gustavo Saraiva

Pontificia Universidad Catolica de Chile

Date Written: May 23, 2022

Abstract

We study the incentives from a two-sided platform to segment the market by providing personalized search results. In our environment, a monopolistic platform is in charge of matching sellers with buyers. Upon being matched, each pair of buyer and seller negotiate prices. If they choose to transact, the platform receives a commission fee proportional to the value of the transaction. The platform is assumed to have full information over customers' and sellers' outside options. We show that in this environment the platform may have incentives to prioritize finding feasible matches to more expensive products so as to inflate market prices and, thus, the commissions it receives from transactions. By doing this, the platform maximizes the number of transactions, which can generate excess liquidity.

Keywords: Market Segmentation, Information Design, Two-sided markets

JEL Classification: C78, D47, D44

Suggested Citation

Vaissman Guinsburg, Pedro and Saraiva, Gustavo, Search Steering in Two-Sided Platforms (May 23, 2022). Available at SSRN: https://ssrn.com/abstract=4117853 or http://dx.doi.org/10.2139/ssrn.4117853

Pedro Vaissman Guinsburg

FEA-USP (Sao Paulo University) ( email )

Av. Prof. Luciano Gualberto 908
São Paulo SP, São Paulo 05508-900
Brazil

HOME PAGE: http://https://sites.google.com/site/pedroguinsburg/home

Gustavo Saraiva (Contact Author)

Pontificia Universidad Catolica de Chile ( email )

Av Libertador General Bernardo O'Higgins 340
Santiago, Región Metropolitana 8331150
Chile
+56 2 2354 2238 (Phone)

HOME PAGE: http://https://escueladeadministracion.uc.cl/

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
13
Abstract Views
82
PlumX Metrics