十一月 4 2022

Platform economics and antitrust enforcement: A little knowledge is a dangerous thing

Katz, Michael L. “Platform economics and antitrust enforcement: A little knowledge is a dangerous thing." Journal of Economics & Management Strategy 28.1 (2019): 138-152.[PDF]

==abstract==

Although the economics of multisided platforms has developed important insights for antitrust policy, there are critical respects in which the body of academic knowledge falls short of providing useful advice to enforcement agencies and the courts. Indeed, there is a substantial risk that recent scholarship will be misapplied to the detriment of sound antitrust policy, as evidenced by the US Supreme Court’s recent decision in American Express. In this note, I identify several areas in which economics research could potentially make significant contributions to the practical antitrust treatment of platforms.

“Justice Stephen Breyer’s dissent mocks the majority’s economic reasoning, as will most economists, including the creators of the “two-sided markets” theory on which the court relied. The court used academic citations in the worst way possible — to take a pass on reality.”

—Wu (2018b) commenting on the Supreme Court’s American Express opinion.

一月 29 2022

Two-sided network effects: A theory of information product design

Parker, Geoffrey G., and Marshall W. Van Alstyne. “Two-sided network effects: A theory of information product design." Management science 51.10 (2005): 1494-1504. [pdf]

original Abstract

How can firms profitably give away free products? This paper provides a novel answer and articulates trade-offs in a space of information product design. We introduce a formal model of two-sided network externalities based in textbook economics—a mix of Katz and Shapiro network effects, price discrimination, and product differentiation. Externality-based complements, however, exploit a different mechanism than either tying or lock-in even as they help to explain many recent strategies such as those of firms selling operating systems, Internet browsers, games, music, and video.

The model presented here argues for three simple but useful results. First, even in the absence of competition, a firm can rationally invest in a product it intends to give away into perpetuity. Second, we identify distinct markets for content providers and end consumers and show that either can be a candidate for a free good. Third, product coupling across markets can increase consumer welfare even as it increases firm profits.

The model also generates testable hypotheses on the size and direction of network effects while offering insights to regulators seeking to apply antitrust law to network markets.

十月 28 2019

Business Models in Two-sided Markets: an Assessment of Strategies for App Platforms.

Kouris, Iana, and Rob Kleer. “Business Models in Two-sided Markets: an Assessment of Strategies for App Platforms." ICMB. 2012. [PDF][****]

==YNY==

文獻回顧可參考

十二月 1 2018

Literature on Two-sided markets (selective)

==seminal papers==

Rochet, Jean‐Charles, and Jean Tirole. “Platform competition in two‐sided markets." Journal of the european economic association 1.4 (2003): 990-1029. (link to PDF)
Armstrong, Mark. “Competition in two‐sided markets." The RAND Journal of Economics 37.3 (2006): 668-691. (link to PDF)
Rochet, Jean‐Charles, and Jean Tirole. “Two‐sided markets: a progress report." The RAND journal of economics 37.3 (2006): 645-667. (link to PDF)

==reviews==

Rysman, Marc. “The economics of two-sided markets." Journal of economic perspectives 23.3 (2009): 125-43. (link to PDF)

十一月 3 2016

Collective Commitment

Date:	2016-07
By:	Christian Roessler Sandro Shelegia Bruno Strulovici
URL:	http://d.repec.org/n?u=RePEc:bge:wpaper:933&r=net
	We consider collective decisions made by agents whose preferences and power depend on past events and decisions. Faced with an inecient equilibrium and an opportunity to commit to a policy, can the agents reach an agreement on such a policy? We provide a consistency condition linking power structures in the dynamic setting and at the commitment stage. When the condition holds, commitment has no value: any agreement that may be reached at the outset coincides with the equilibrium without commitment. When the condition fails, as in the case of time-inconsistent preferences, commitment can improve outcomes. We discuss several applications.
JEL:	D70 H41 C70

十一月 2 2016

Monetization Strategies for Internet Companies

Date:	2016
By:	Voigt, Sebastian
URL:	http://d.repec.org/n?u=RePEc:dar:wpaper:83314&r=net
	Many Internet service companies such as providers of two-sided markets, social networks, or online games rely on the social interaction between their user base and thus capitalize from positive network effects. For such companies, a common strategy is to offer (basic) services for free (and thereby abolish entry barrier of a one-off or recurring price) and to charge their users for premium services. Companies such as eBay, PayPal, LinkedIn, or Skype added paid services to their originally free business models, either via subscriptions, PAYG, or direct sales of virtual items. Their strategy how to make money and whom to bill however differs widely. In the Internet business, ‘monetization’ has become a frequently used buzzword for all aspects of a company’s revenue strategy which includes the decision who should be billed (e.g., for a two-sided market: seller vs. buyer vs. advertisers only), with which price model (e.g., mandatory subscription vs. optional subscriptions vs. selling virtual currency or items) and price level (e.g., differentiated between user groups), and – in case of a freemium strategy – how a new (free) user can be converted most efficiently into a paying and remunerative customer (e.g., via effective CRM measures). The overarching objective of all monetization measures is to maximize the company’s revenue and/or profit. The field of monetization offers a wide field of research opportunities. Four of these are covered in this dissertation: The Name-your-own-price model, users’ spending behavior in virtual communities, the monetization of network effects in social networks, and the legal boundaries of social network usage. As a result, this dissertation solves a series of questions currently being worked on by practitioners and uses a wide range of methods from various disciplines such as economic, psychological, and game theory.

十月 26 2016

Reimbursing Consumers’ Switching Costs in Network Industries

Date:	2016-09
By:	Jiawei Chen (Department of Economics, University of California, Irvine, 3151 Social Science Plaza, Irvine, CA 92697, USA) Michael Sacks (Department of Economics, West Virginia University, 1601 University Ave., PO Box 6025, Morgantown, WV 26506-6025, USA)
URL:	http://d.repec.org/n?u=RePEc:net:wpaper:1613&r=net
	This paper investigates firms’ decisions to reimburse consumers’ switching costs in network industries. Prior literature finds that switching costs incentivize firms to harvest their locked-in consumers rather than price aggressively for market dominance, resulting in a lower market concentration. Using a dynamic duopoly model, we show that this result is reversed if firms have the option to reimburse consumers’ switching costs. In that case the larger firm offers a bigger reimbursement to switching consumers than the smaller firm does, as an additional instrument to propel itself to market dominance. Consequently, an increase in switching cost increases market concentration. Compared to the case without reimbursements, allowing firms the option to reimburse results in greater consumer welfare despite having a much higher market concentration. Consumers’ benefits from a larger network and switching cost reimbursement outweigh the higher price charged by a dominant firm.
Keywords:	network goods, price discrimination, reimbursement, switching costs
JEL:	L11 L13

十月 26 2016

Effectiveness of Paid Search Advertising: Experimental Evidence

Date:	2016-10
By:	Weijia (Daisy) Dai (Lehigh University) Michael Luca (Harvard Business School, Negotiation, Organizations & Markets Unit)
URL:	http://d.repec.org/n?u=RePEc:hbs:wpaper:17-025&r=net
	Paid search has become an increasingly common form of advertising, comprising about half of all online advertising expenditures. To shed light on the effectiveness of paid search, we design and analyze a large-scale field experiment on the review platform Yelp.com. The experiment consists of roughly 18,000 restaurants and 24 million advertising exposures – randomly assigning paid search advertising packages to more than 7,000 restaurants for a three-month period, with randomization done at the restaurant level to assess the overall impact of advertisements. We find that advertising increases a restaurant’s Yelp page views by 25% on average. Advertising also increases the number of purchase intentions – including getting directions, browsing the restaurant’s website, and calling the restaurant – by 18%, 9%, and 13% respectively, and raises the number of reviews by 5%, suggesting that advertising also affects the number of restaurant-goers. All advertising effects drop to zero immediately after the advertising period. A back of the envelope calculation suggests that advertising would produce a positive return on average for restaurants in our sample.

八月 11 2016

Risk and punishment revisited Errors in variables and in the lab

Date:	2016-07-26
By:	Christoph Engel (MPI for Research on Collective Goods, Bonn) Oliver Kirchkamp (School of Economics and Business Administration, Friedrich-Schiller-University Jena)
URL:	http://d.repec.org/n?u=RePEc:jrp:jrpwrp:2016-015&r=net
	We provide an example for an errors in variables problem which might be often neglected but which is quite common in lab experimental practice: In one task, attitude towards risk is measured, in another task participants behave in a way that can possibly be explained by their risk attitude. How should we deal with inconsistent behaviour in the risk task? Ignoring these observations entails two biases: An errors in variables bias and a selection bias. We argue that inconsistent observations should be exploited to address the errors in variables problem, which can easily be done within a Bayesian framework.
Keywords:	Risk, lab experiment, public good, errors in variables, Bayesian inference
JEL:	C91 D43 L41