Contents lists available at ScienceDirect Telematics and Informatics journal homepage: www.elsevier.com/locate/tele The eﬀect of online platform maturity on the eﬃciency of oﬄine industry Hana Kim a , Daeho Lee b, ⁎ , Junseok Hwang a a Technology Management, Economics and Policy Program, Seoul National University, 1 Gwanak-ro, Gwanak-gu, Seoul 08826, Republic of Korea b Department of Interaction Science, Sungkyunkwan University, 25-2 Sungkyunkwan-ro, Jongno-gu, Seoul, Republic of Korea ARTICLE INFO Keywords: Platform Two-sided markets Information gatekeeper Intermediaries Meta-frontier analysis Technical eﬃciency ABSTRACT The role of platform as an information mediator has been becoming more vital by satisfying buyers’ needs for a reasonable purchase and sellers’ need for more exposure to buyers within the copious information ﬂood. For the platform service provider, increasing the network externality is important to induce both sides while platforms can cause sellers to invest more and create severe competition among sellers, which take a toll on sellers’ surplus. Therefore, this study investigates whether platforms yield beneﬁts for sellers as the platform matures, securing the network externality. Thus, this study divides the seller side industry into 3 periods based on the level of platform maturation. The eﬃciency in each period is measured using stochastic frontier analysis and eﬃciencies of each period are compared using meta-frontier analysis. The results show the overall industry eﬃciency improves with securing the network externality as the platform matures. However, if the individual ﬁrm is resistant to innovation, the ﬁrm’seﬃciency might not be far behind compared to the ﬁrm which led the innovation. 1. Introduction In the development of a new computer- and internet-based economy (Shapiro and Varian, 2013, p. 173–175), anything can be information with digitalization. Thus, the new economy has started to involve abounding information by including a wide array of oﬄine goods such as food and hotels. There is almost zero cost to reproduce digitalized information after its creation (Shapiro and Varian, 2013, p. 3), so the speed of information diﬀusion through the internet has been increasing at an astronomical rate. However, now people must spend time and money to ﬁnd the proper information within the copious information ﬂood. The platform mediating information between sellers and buyers came to the forefront of society because customers need to ﬁnd proper information. This platform has been called several things, such as intermediation (Edelman and Wright, 2015), a search platform (Wang and Wright, 2016), and an information gatekeeper (Baye and Morgan, 2001) and it has been studied as a part of platform study primarily from the viewpoint of network externality. It provides information about existing goods depending on buyer preferences rather than producing goods. Buyers reap beneﬁts from using the platform because it reduces their search costs (Baye and Morgan, 2001) and allows them to make rational purchases (White and Weyl, 2016). Sellers use platform services for exposure to more buyers (Edelman et al., 2016). For example, Priceline provides information and the price of hotels to people preparing to travel and creates an online link between sellers and travelers. As the information provided through the internet becomes more diverse and enormous, platforms that provide information based on buyer preferences and suggest rational prices for goods have been growing gradually. As one example, the sales of the hotel http://dx.doi.org/10.1016/j.tele.2017.10.003 Received 14 March 2017; Received in revised form 20 August 2017; Accepted 10 October 2017 ⁎ Corresponding author. E-mail addresses: tea112@snu.ac.kr (H. Kim), daeho.lee@skku.edu (D. Lee), junhwang@snu.ac.kr (J. Hwang). Telematics and Informatics xxx (xxxx) xxx–xxx 0736-5853/ © 2017 Elsevier Ltd. All rights reserved. Please cite this article as: kim, h., Telematics and Informatics (2017), http://dx.doi.org/10.1016/j.tele.2017.10.003