Senior Consultant Salvatore Piccolo authored a paper that highlights how platform business models shape incentives both to collect marketplace information and to share it with third-party sellers. Pure intermediation platforms are more willing both to acquire information and to disclose it, while hybrid platforms attach strategic value to exclusive data, which makes them more reluctant to share it and, under disclosure mandates, sometimes less willing to collect it in the first place.
From a policy perspective, the results show that rules on data sharing cannot be separated from their effects on data collection. While welfare is maximized when no information is collected, if a platform does acquire information, disclosure may improve outcomes when the platform is sufficiently effective at providing marketplace services.
Abstract
This paper studies how platform business models shape incentives to acquire and disclose marketplace information. It compares a pure intermediation platform, which merely brokers trade between third-party sellers, with a hybrid platform that also competes downstream through a private label. In both settings, the platform invests in demand information, chooses how much of that information to disclose, and provides a marketplace-wide service effort that improves ecosystem quality. The analysis shows that the two business models generate sharply different information policies. A pure intermediary fully discloses to third-party sellers any information it acquires, because exclusive information has no private strategic value. By contrast, a hybrid platform prefers to keep information private and, therefore, treats disclosure mandates as implicit constraints on data acquisition. With a covered-market, consumers prefer information not to be shared irrespective of the business model. In the hybrid-platform scenario, however, they may still prefer the platform to collect information when the platform is sufficiently efficient at providing ecosystem services. Total welfare is maximized when no information is collected. Yet, conditional on some information being available to the platform, disclosure may be second-best optimal when the platform is sufficiently efficient at providing ecosystem services.
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The views and opinions expressed in this paper are those of the authors and do not necessarily reflect the views of Econic Partners, NERA or either firm’s clients.
