Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/105065 
Year of Publication: 
2014
Series/Report no.: 
MAGKS Joint Discussion Paper Series in Economics No. 48-2014
Publisher: 
Philipps-University Marburg, Faculty of Business Administration and Economics, Marburg
Abstract: 
This paper analyzes the incentives of a monopolistic matchmaker to generate user-specific information in order to increase match-quality and profits. By merging two-sided-markets with two-sided-matching we derive a micro-foundation of cross-side externalities dependent on the number of potential matches and the accuracy-level of user-specific information. Incentives to invest into identification technologies are determined by the scalability of the (fixed) investments and the resulting effect on match-quality. We show that these effects work into opposing directions, i.e., while scalability works in favor for platforms with large customer bases, the effect of identification on match-quality is greater for small scale platforms.
Subjects: 
two-sided markets
two-sided matching
advertising
segmentation and identification
Document Type: 
Working Paper

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