'Sherlocking' and Platform Information Policy

35 Pages Posted: 24 Jan 2023 Last revised: 10 Mar 2024

See all articles by Jay Pil Choi

Jay Pil Choi

Michigan State University - Department of Economics; CESifo (Center for Economic Studies and Ifo Institute)

Kyungmin Kim

Emory University

Arijit Mukherjee

Michigan State University

Date Written: March 7, 2024

Abstract

Platform-run marketplaces may exploit third-party sellers' data to develop competing products, but potential for future competition can deter sellers' enrty. 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

JEL Classification: D82, D42, L1

Suggested Citation

Choi, Jay Pil and Kim, Kyungmin and Mukherjee, Arijit, 'Sherlocking' and Platform Information Policy (March 7, 2024). Available at SSRN: https://ssrn.com/abstract=4332558 or http://dx.doi.org/10.2139/ssrn.4332558

Jay Pil Choi

Michigan State University - Department of Economics ( email )

101 Marshall Hall
East Lansing, MI 48824
United States
517-353-7281 (Phone)

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

HOME PAGE: http://www.CESifo.de

Kyungmin Kim

Emory University ( email )

201 Dowman Drive
Atlanta, GA 30322
United States

HOME PAGE: http://https://sites.google.com/site/kyungminteddykim/Home

Arijit Mukherjee (Contact Author)

Michigan State University ( email )

Marshall Adams Hall
East Lansing, MI 48824-1122
United States

HOME PAGE: http://www.amukherjee.net

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