The Structuring of Markets for Infomediation: Horizontal versus Vertical Dynamics

Abstract: Two factors play a decisive role in the structuring of Internet based markets for infomediation (informational intermediation): network externalities and information processing. First, these are examined separately. The two-sided markets literature focuses on the impact of network externalities in a context of competition among 2-sided platforms. It explains the level of concentration/fragmentation of those markets, and explores its welfare implications. We shall call this model the "horizontal " model of structuring. Symetrically, a "vertical " process of division of labour among the infomediaries ' value chain is observed. It results of the complexification of intermediation in a context of strong quality uncertainty and high codification investments. Intermediaries specialize and develop cooperative relationships with each others. Secondly, the paper examines the implications of the simultaneous co-existence of H and V dynamics on the structuring of the market for infomediation. This co-existence generates frictions. Two levels of frictions are distinguished: i) market governance (standards and certifications) ; ii) commercial interactions (the so-called 'coopetition'). Empirical illustrations are taken from th