Two-sided market models in which platforms compete in two-part tariffs, i.e., a subscription and a per-transaction fee, are often plagued by a continuum of equilibria. This paper incorporates heterogeneous trading behavior of agents into the existing framework. We show that this natural and...

In this article, we analyze the dynamic competition between two platform firms (A&B) in two-sided markets with network externalities. In Period 1, platform A or B wins the contest in a first stage and can serve the two-sided market monopolistically in a second stage. In Period 2, the two...

We develop a model of contests on networks. Each player is “connected” to a set of contests and exerts a single effort to increase the probability of winning each contest to which she is connected. We characterize equilibria under the Tullock contest success function and explore how behavior...

We conducted a laboratory experiment to study the price setting behavior in two-sided markets. We seek to answer two specific research questions: Do participants charge the equilibrium prices that can be derived from a theoretical model? How is the price setting affected by the characteristics...

When dealing with consumer choices, social pressure plays a crucial role; also in the context of market competition, the impact of network/social effects has been largely recognized. However, the effects of firm-specific social recognition on market equilibria has never been addressed so far. In...

We study competitive behavior in all-pay Tullock (1980) contests with identity-dependent externalities (IDEs) governed by a fixed network. First, we introduce a model of network contest games, in which the prize generates an externality---which may be positive or negative---that impacts each...

We present a model where compensation within a workteam is determinedendogenously by the use of a rank-order tournament. Team memberscompete in their efforts for the right to propose the distribution of a prizewithin the team. The implementation of a proposal requires the approvalof other team...

The common prior assumption asserts that the beliefs of agents in different states of theworld are their posteriors based on a common prior and possibly some private signal. Commonpriors are pervasive in most economic models of incomplete information, oligopoly models withasymmetrically informed...

The paper proves that in two-player logit form symmetric contestswith concave success function, commitment to a particular strategydoes not increase a player's payo, while in contests with more thantwo players it does. The paper also provides a contest-like game inwhich commitment does not...

We show that the presence of loss aversion on the part of participantsin a Tullock imperfectly discriminating contest will significantlyreduce the proportion of the rent dissipated in the form of resourcesused up in the competition for that rent...