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Costs and Benefits of Congestion in Two-Sided Markets: Evidence from the Dating Market

Author

Listed:
  • Tobias Lehmann

    (University of Lausanne)

  • Camille Terrier

    (Queen Mary University London)

  • Rafael Lalive

    (University of Lausanne)

Abstract

Congestion is a widespread phenomenon in two-sided markets, but evidence on its costs and benefits is limited. Using data from an online dating platform, we document a large excess demand, or congestion, for some women. By exploiting exogenous variation in the number of men and women using the platform, we show that congestion slows down matching time for men. Congestion benefits women who screen men’s profiles quickly, by increasing their choice set. This asymmetry implies that policies aimed at reducing congestion can harm the side of the market that benefits from congestion.

Suggested Citation

  • Tobias Lehmann & Camille Terrier & Rafael Lalive, 2023. "Costs and Benefits of Congestion in Two-Sided Markets: Evidence from the Dating Market," Working Papers 964, Queen Mary University of London, School of Economics and Finance.
    • Handle: RePEc:qmw:qmwecw:964
    as

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    File URL: https://www.qmul.ac.uk/sef/media/econ/research/workingpapers/wp964.pdf
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Congestion; two-sided markets; online platforms;
    All these keywords.

    JEL classification:

    • D4 - Microeconomics - - Market Structure, Pricing, and Design
    • D47 - Microeconomics - - Market Structure, Pricing, and Design - - - Market Design
    • D62 - Microeconomics - - Welfare Economics - - - Externalities
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness

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