Search Frictions and the Design of Online Marketplaces

  title={Search Frictions and the Design of Online Marketplaces},
  author={Andrey Fradkin},
  booktitle={AMMA 2015},
Online marketplaces increasingly act as intermediaries in labor, housing, dating, and other markets where traders match with each other. These marketplaces use novel data generated by users’ activities on the website to design algorithms and products that inuence the search and matching process. I use internal data from Airbnb, a 
Cream Skimming and Information Design in Matching Markets
It is shown full information disclosure leads to a market failure because of excessive rejections by the sellers, and coarse information policies are able to restore efficiency. Expand
Consumer Price Search and Platform Design in Internet Commerce
Search frictions can explain why the "law of one price" fails in retail markets and why even firms selling commodity products have pricing power. In online commerce, physical search costs are low,Expand
Search, Matching, and the Role of Digital Marketplace Design in Enabling Trade: Evidence from Airbnb
Digital peer-to-peer marketplaces have increased the volume of trade in underutilized assets. I use the setting of Airbnb to investigate transaction costs in these markets and the role of searchExpand
Search, Selectivity, and Market Thickness in Two-Sided Markets: Evidence from Online Dating
This paper investigates search and matching in online marketplaces, emphasizing how user behavior responds to the presence of others on the platform, which I call ``market thickness". Unlike standardExpand
Supply Constraints as a Market Friction: Evidence from an Online Labor Market
In some markets for services, buyers do not necessarily know whether their preferred seller has the capacity to take on a proposed project. Sellers are unlikely to advertise their true capacityExpand
Peer-to-Peer Markets
Peer-to-peer markets such as eBay, Uber, and Airbnb allow small suppliers to compete with traditional providers of goods or services. We view the primary function of these markets as making it easyExpand
Digital Market Design and Inequality
Digital marketplaces and platforms are important and their design affects the rest of the economy. These markets are also constantly evolving due to the design decisions of firms, regulation fromExpand
Peer-to-Peer Rental Markets in the Sharing Economy
To investigate whether peer-to-peer rental markets for durable goods are welfare-improving, we develop a new dynamic model of such markets in which users with heterogeneous utilization rates may alsoExpand
The Welfare Effects of Peer Entry in the Accommodation Market: The Case of Airbnb
We study the effects of enabling peer supply through Airbnb in the accommodation industry. We present a model of competition between flexible and dedicated sellers - peer hosts and hotels - whoExpand
An Economic Policy Perspective on Online Platforms
This report provides an overview of the relevant economic research literature on platforms or multi-sided online markets. It discusses platforms from a regulatory policy angle, including potentialExpand


Consumer Price Search and Platform Design in Internet Commerce
Search frictions can explain why the "law of one price" fails in retail markets and why even firms selling commodity products have pricing power. In online commerce, physical search costs are low,Expand
Why Do Intermediaries Divert Search?
We analyze the incentives to divert search for an information intermediary who enables buyers (consumers) to search affiliated sellers (stores). We identify two original motives for diverting searchExpand
Misdirected search effort in a matching market: causes, consequences and a partial solution
Using data from an online labor market, it is shown that buyers inefficiently pursue oversubscribed sellers and how the market-creating platform can optimally allocate buyer attention, given each seller's estimated per-encounter probability of forming a match. Expand
Asymmetric Information, Adverse Selection and Online Disclosure: The Case of eBay Motors
Since Akerlof (1970), economists have understood the adverse selection problem that information asymmetries can create in used goods markets. The remarkable growth in online used goods auctions thusExpand
Platform competition in two sided markets
Many if not most markets with network externalities are two-sided. To succeed, platforms in industries such as software, portals and media, payment systems and the Internet, must “get both sides ofExpand
Pricing and Matching with Frictions
Suppose that n buyers each want one unit and m sellers each have one or more units of a good. Sellers post prices, and then buyers choose sellers. In symmetric equilibrium, similar sellers all postExpand
Estimating Demand in Search Markets: The Case of Online Hotel Bookings
In this paper, we emphasize that choice sets generated by a search process have two properties: first, they are limited; second, they are endogenous to preferences. Both factors lead to biasedExpand
Matching and Sorting in Online Dating
Using data on user attributes and interactions from an online dating site, we estimate mate preferences, and use the Gale-Shapley algorithm to predict sta ble matches. The predicted matches areExpand
A Price Theory of Multi-Sided Platforms
I develop a general theory of monopoly pricing of networks. Platforms use insulating tariffs to avoid coordination failure, implementing any desired allocation. Profit-maximization distorts in theExpand
Efficiency of Simultaneous Search
This paper presents an equilibrium labor search model in which workers can simultaneously apply to multiple firms to increase their search intensity. They observe firms’ wage postings before choosingExpand