Quality screening and information disclosure in two-sided markets

This paper studies how a platform can use quality screening to alleviate the asymmetric information problem between users on the two sides. We consider two screening mechanisms through which a platform communicates the quality information from one side to the other: minimum threshold and multiple thresholds. For each mechanism, we derive the equilibrium outcome and conduct welfare analysis. It shows that the optimal screening rule is determined by the magnitude (or the distribution) of the cross-group externalities and the operation cost of the platform.