Online Infomediary for One-of-a-Kind Services

Abstract

We analyze a monopolistic online infomediary that connects the consumer and providers of one-of-a-kind services (e.g., home improvement). The infomediary selects a “platform” that dictates who pays (the providers or the consumer) and the price format (linear vs subscription). We examine how the platform decision and the platform-specific fee jointly affect the bidding process among participating providers. We show the infomediary prefers either charging the providers with linear pricing, or charging the consumer with subscription pricing, depending on whether it could ensure a sufficiently large number of available providers. We further examine social welfare and the role of job characteristics.