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This online appendix contains the derivation of the closed form solutions for the examples used in the main working paper No. 16-002. It establishes the result stated in Section 4.3 of the main paper, that Proposition 4 continues to hold even if the price is endogenous and there are production...
Persistent link: https://www.econbiz.de/10011305274
Revenue sharing between principals and agents is commonly used to balance double-sided moral hazard. We provide a theory of how, when such revenue-sharing is optimal, a principal allocates control rights over decisions that either party could make. We show that the principal either keeps control...
Persistent link: https://www.econbiz.de/10011305277
This paper explains why platforms such as Amazon and Visa rely predominantly on ad-valorem fees, fees which increase proportionally with transaction prices. It also provides a new explanation for why ad-valorem sales taxes are more desirable than specific taxes. The theory rests on the ability...
Persistent link: https://www.econbiz.de/10013064959
An experiment is designed to test the equilibria typically studied in the repeated game literature (i.e. those based on Nash reversion and optimal symmetric two-phase punishment strategies). One hundred pairs of subjects repeatedly set prices in a differentiated demand duopoly setting. Unlike...
Persistent link: https://www.econbiz.de/10013137653
This paper presents a model of competing payment schemes. Unlike previous work on generic two-sided markets, the model allows for the fact that in a payment system users on one side of the market (merchants) compete to attract users on the other side (consumers who may use cards for purchases)....
Persistent link: https://www.econbiz.de/10014074028
This paper presents a model in which investors, acting in self-interest, force interest rates to the levels desired by the monetary authority. If interest rates move out of line with those required by the monetary authority, a statement (an open mouth operation) is all that is needed to restore...
Persistent link: https://www.econbiz.de/10014064148
We study the economic tradeoffs that drive organizations to position themselves closer to or further away from a multi-sided platform (MSP) business model, relative to three traditional alternatives: vertically integrated firms, resellers or input suppliers. These tradeoffs lead to a...
Persistent link: https://www.econbiz.de/10012989155
A growing number of intermediaries (e.g. Amazon, Apple's Appstore, and Walmart) act as resellers on their own marketplaces. We build a model of dual marketplace and reseller intermediation to explore the implications of this practice, and the call to ban it, taking into account an intermediary's...
Persistent link: https://www.econbiz.de/10012833519
A fundamental aspect of any open payment system is the interchange fee that is paid from the merchant's bank to the cardholder's bank. Using a model in which there is partial participation by heterogeneous consumers and merchants, this paper characterizes the output maximizing, profit maximizing...
Persistent link: https://www.econbiz.de/10012742188
Intermediaries can choose between functioning as a marketplace (on which suppliers sell their products directly to buyers) or as a reseller (purchasing products from suppliers and selling them to buyers). We model this as a decision between whether control rights over a non-contractible decision...
Persistent link: https://www.econbiz.de/10012989153