Muxin Li 

CORE

will give a presentation on:

One-Sided or Two-Sided? A Strategic Search Design Approach

Abstract:

Major digitalized intermediaries like Amazon, Taobao, and Sam’s Club make a significant investment each year in designing the search environments on their websites. In this paper, we propose a model for analyzing their search design strategies. Specifically, we endogenize an intermediary’s search design by allowing it to affect its consumers’ search cost through its search investment. Using this strategic search design approach, we compare two popular types of online intermediaries: a one-sided retailer and a two-sided platform. We find that product differentiation plays a critical role in determining the intermediary’s search design. Furthermore, its effect is not monotonic and depends heavily on the type of intermediary. In this context, we then investigate the underlying condition under which the one type of intermediary is more profitable than the other.