Matriz de Causa y efecto

Other considerations have concerned the literature, in particular quality. More specifically, the literature looked at quality from two different perspectives:

(i) Quality of platform’s service.

Recent papers (Bardey et al., 2009; Bardey and Rochet, 2009) study com- petition between platforms in health care and education sector. Schools and hospitals can be viewed as two-sided since they try to attract patients/pupils in one side and physicians/teachers on the other side. The first is an applica- tion of the two-sided logic in a model where two different health plans compete for policy-holders on one side and for physicians on the other side, assuming heterogeneity of the policy-holders in risk of illness. Riskier policy-holders are more willing to pay and have a stronger preference for diversity of physicians. This idea is to model the coexistence in the market of two different health plans: one offering more diversity and attracting riskier policy-holders, the

other offering less diversity and attracting lower risk policy-holders. Since a riskier policy-holder exhibits a higher willingness to pay, the attraction physi- cians improves the service of the platform. Nevertheless, it also induce riskier policy holders to join the health plan, involving an upward pressure on prices for patients.

The second paper generalizes the first considering the concept of common network externality, i.e. both groups benefit from an increase in the size of one group and from a decrease in the size of the other. In particular they argue that in education and health, both sides evaluate a sort of quality index defined by the ratios #physicians/#patients and #teachers/#pupils. It is used as an indicator of quality because an increase of this ratio allows patients/pupils to be better followed up and physicians-teachers to work better. In this realistic case, the common network externality is homogeneous of degree zero: the paper demonstrates that common network externalities have no impact on equilibrium profits of the platform. In particular, the increase in price in one side is entirely shifted to the other side.

(ii) Quality of the other side.

One may argue that agents are interested not only in the number of agents joining the platform in the other side, but also in their quality. In partic- ular, Damiano and Li (2007); Damiano and Hao (2008) and Hagiu (2009a), have pointed out how, when quality matters, the positive externalities are somehow mitigated, as the platform finds it profitable to allow entry only of high quality consumers. In other words, it implies the implementation of an exclusion policy by the platform. The phenomenon of exclusion is evident in the governance rules of romantic matchmaking internet sites and video-games consoles.

In the first case, some romantic matchmaking sites like eHarmony carefully screen and reject a fraction of applicants; Damiano and Hao (2008); Dami- ano and Li (2007) deal with the informational problem of dating online, in which agents often misrepresent their profile. They point out how these in- formational problems might decrease the demand for dating online, because of its perception among the public. It reduces the quality of Internet search

and matching and, in fact, it prevents many lonely people from fully utilizing the online dating services. Internet dating agencies rely on individual users to report information about themselves truthfully and have little resource or capability of directly validating the information, then price discrimination can be used to make the reported information credible and to improve match quality.

Price discrimination as a mechanism of self-selection is evident in traditional meeting places: important examples are night clubs catering people with more expensive tastes, which charge more agents for the access. In order to model this phenomenon, an important (and strong) assumption is that agents in each side can be vertically differentiated according to a one-dimensional char- acteristic perceived as quality by the other side. To emphasize this aspect, the authors focus only on this possibility, neglecting both positiveinter-group externalities and platform competition.

According to the example, the platform does not observe types but it can use prices to sort out high types from low types in each side. It might choose to launch two different market places, choosing two different prices for each side. The idea is to induce agents in both sides to choose the market place conceived for them relying on a self-selection mechanism, which improves the quality of the matchmaking service, since low (high) types in each side should choose the same market place of low (high) types of the other side. The choice of prices must fulfill incentive compatibility constraints, inducing low type and high type individuals to choose the ”correct” market place.

A recent paper of Hagiu (2009a) is motivated by the observation that Mi- crosoft, Nintendo and Sony insert security chips in their consoles in order to exclude low quality game developers. It goes further Damiano and Hao (2008), as it takes into account both cross externalities and platforms’ competition. For these reasons, this work can have a wider application and it is more specifi- cally linked with the early literature of two-sided markets. However, this work finds more fitting application in software industries, in particular video-games. The crucial assumption is that users’ side is interested in the average quality and in the number of applications available on the platforms. Preference for

quality results in the incentives for the platform to exclude some - low qual- ity - developers. Differently from Damiano and Hao (2008), Hagiu focuses a non-pricing instrument to exclude, i.e. a minimum quality standard. Indeed, while in matchmaking contexts the intermediary lacks (truthful) information about quality, a console producer is able to observe directly the quality of game proposed by developers and then it can directly discriminate choosing other-than-prices tools.

Taking into account quality involves some additional costs for platforms, which have (i) to evaluate the quality of agents and (ii) to regulate the interplay between the two sides. Case(i) is referred to the fact that platform does not precisely know the quality of agents who are joining. The solution to this informational problem proposed by Damiano and Hao (2008) is the use of sorting prices. Case (ii) refers to situations in which this quality is known by the platform. In this case, exclusion is a solution to regulate the interplay be- tween the two sides. The imposition of minimum quality standards proposed by Hagiu is only one of a set of possible governance rules that platforms can use (and, in fact, use).