Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/233644 
Year of Publication: 
2021
Citation: 
[Journal:] Managerial and Decision Economics [ISSN:] 1099-1468 [Volume:] 42 [Issue:] 3 [Publisher:] Wiley [Place:] Hoboken, NJ [Year:] 2021 [Pages:] 588-604
Publisher: 
Wiley, Hoboken, NJ
Abstract: 
Determining the effects of quality differentiation on the efficiency of two-sided service markets is challenging. The presence of private information on both market sides and the heterogeneity of sellers can lead to substantial economic inefficiencies. Hence, this paper investigates how quality-differentiated sellers affect market efficiency from the perspective of mechanism design theory. First, we characterize second-best mechanisms for matching buyers and sellers. We then propose a heuristic algorithm for approximating the welfare-maximizing match outcomes. Based on empirical data, our simulation study suggests that an increased quality differentiation can reduce market efficiency; however, this inefficiency vanishes as the market size increases.
Persistent Identifier of the first edition: 
Creative Commons License: 
cc-by Logo
Document Type: 
Article
Document Version: 
Published Version

Files in This Item:
File
Size
665.96 kB





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.