Effects of Platform Protection in a Duopoly in the Presence of Asymmetric Information and User Security Preference

Abstract

This study addresses the effects of platform protection and different information structures on equilibrium outcomes for competing superior and inferior two-sided platforms. The conditions under which the platform vendors, content providers, and users prefer to the higher platform protection are derived. When users are informed, the preferences of the inferior platform and its content providers depend on both the security effect and the change in user utility from content consumption. When users are uninformed, the impact of the security effect diminishes. Information disclosures might be detrimental to customer surplus and social welfare as the increasing of protection levels.