검색 알고리즘의 공개와 플랫폼 경쟁 분석

An Economic Analysis of Making Search Algorithms Public in e-Platform Competition

Purpose This paper aims to analyze the economic effects of search portal’s algorithm open to the public in platform competition. Design/Methodology/Approach We set up a platform competition model based on the Hotelling location model in line with traditional economic approach to characterize a Nash equilibrium. A group of buyers, a group of sellers and two platforms live in a one-unit-long city. The platforms intermediate two groups with charging fees. Specifically, we assume algorithm asymmetry can affect platform competition through three separate channels: buyer’s search cost, seller’s signaling cost, and platform’s screening cost. Findings When two platforms charge fee on sellers only, implementing regulation of making algorithm public will change a Nash equilibrium by the next three channels. First, moderation of asymmetry in buyer’s search cost narrows a gap between fees charged on sellers by increasing indirect network effects and therefore inducing a fierce fee competition. Second, a rise in seller’s signaling cost reduces indirect network effects but forces some sellers out of market, which narrows a gap between seller’s. Third, an increase in platform’s screening cost does not change indirect network effects and so does not narrow a gap between seller’s fees but a higher fee due to increas in platform’ cost drives some sellers out of market. Research Implications Theoretical and numerical studies are required to confirm which cost change will be dominant before the regulation of making algorithm public is implemented.