‘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
Date Written: July 21, 2020
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
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