Information Disclosure In The Two-Sided Market

This paper analyzes information disclosure in the two-sided market with one monopolistic platform and competing platforms. We find that pertaining to the monopoly platform, greater network externalities tend to increase the information being disclosed, but with competing platforms, increasing network externalities may decrease or increase the disclosed information, depending on the information disclosure cost. However, the relation between the competitiveness of either side and the amount of disclosed information is ambiguous. We show that under certain conditions, the welfare and disclosure cost demonstrate a U-shaped relation, which cautions against the policy aiming at decreasing the information disclosure cost.