Consumer Search, Firm Heterogeneity, and Platform Design
Published online on June 25, 2026
Abstract
["The RAND Journal of Economics, EarlyView. ", "\nABSTRACT\nWe study the optimal design of a monopoly platform that interacts with heterogeneous firms and consumers who face uncertainty about product values and prices. Consumers search randomly among firms recommended by the platform. The platform designs a menu of contracts tailored to different firm types and allocates consumer visits across these firms. We show that the optimal platform design creates a “superstar effect,” whereby high‐type firms capture a disproportionately large market share, and improves consumer welfare relative to the no‐design benchmark."]