‘Information Doesn’t Want to Be Free’: Informational Shocks With Anonymous Online Platforms

IEB Working Paper N. 2020/08

36 Pages Posted: 22 Oct 2020

See all articles by Amedeo Piolatto

Amedeo Piolatto

Autonomous University of Barcelona; Barcelona Economics Institute (IEB); Barcelona Graduate School of Economics (Barcelona GSE)

Date Written: July 21, 2020

Abstract

Anonymous information platforms (e.g. Airbnb) provide information about experience goods while keeping agents' identity hidden until the transaction is completed. In doing so, they generate heterogeneity in the information levels across consumers. In this paper, I show that such platforms induce a weak increase of offline prices and that only low-valuation goods are cheaper online than offline. Platforms always lead to an increase in profits. In terms of consumer welfare, the platform equilibrium is Pareto superior for low-and high-valuation goods, while for intermediate ranges some buyers benefit while others lose from the presence of the platform.

Keywords: Anonymous information platforms, experience goods, mismatch costs, Spokes model, horizontal competition

JEL Classification: D02, D21, D43, D61, D83, L11, L13, L15

Suggested Citation

Piolatto, Amedeo, ‘Information Doesn’t Want to Be Free’: Informational Shocks With Anonymous Online Platforms (July 21, 2020). IEB Working Paper N. 2020/08, Available at SSRN: https://ssrn.com/abstract=3685838 or http://dx.doi.org/10.2139/ssrn.3685838

Amedeo Piolatto (Contact Author)

Autonomous University of Barcelona ( email )

Department of Economics and Economic History
Edifici B - Campus Bellaterra
Barcelona, 08193
Spain

HOME PAGE: http://https://sites.google.com/site/piolatto/

Barcelona Economics Institute (IEB) ( email )

c/ John M. Keynes, 1-11
Barcelona, 08034
Spain

HOME PAGE: http://https://sites.google.com/site/piolatto/

Barcelona Graduate School of Economics (Barcelona GSE) ( email )

Ramon Trias Fargas, 25-27
Barcelona, Barcelona 08005
Spain

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