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For-Profit Search Platforms

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  • Niedermayer, Andras
  • Shneyerov, Artyom

Abstract

We consider optimal pricing by a profit-maximizing platform running a dynamic search and matching market. Buyers and sellers enter in cohorts over time, meet and bargain under private information. The optimal centralized mechanism, which involves posting a bid-ask spread, can be decentralized through participation fees charged by the intermediary to both sides. The sum of buyers’ and sellers’ fees equals the sum of inverse hazard rates of the marginal types and their ratio equals the ratio of buyers’ and sellers’ bargaining weights. We also show that a monopolistic intermediary in a search market may be welfare enhancing.

Suggested Citation

  • Niedermayer, Andras & Shneyerov, Artyom, 2013. "For-Profit Search Platforms," Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems 436, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich.
    • Handle: RePEc:trf:wpaper:436
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    References listed on IDEAS

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    Cited by:

    1. Goos Maarten & Van Cayseele Patrick & Willekens Bert, 2014. "Platform Pricing in Matching Markets," Review of Network Economics, De Gruyter, vol. 12(4), pages 437-457, February.

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    More about this item

    Keywords

    Dynamic random matching; two-sided private information; intermediaries;
    All these keywords.

    JEL classification:

    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness

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