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Volume 28, Issue 1, Spring 2018 – SPECIAL ISSUE on Platforms

Friends or foes? Examining platform owners’ entry into complementors’ spaces
Feng Zhu

As platform owners continue to expand their ecosystems, many of them have started to provide consumers with their own complementary applications. These moves position the platform owners as direct competitors to their complementors. This paper surveys empirical studies that examine the direct entry of platform owners into complementors’ product spaces. It finds that both the motivation and impact of such entries on complementors are multifaceted. The motivation behind platform owners’ direct entry goes beyond value capture, and the impact of platform entry on complementors varies across empirical settings. It identifies several future research directions that can help advance our understanding of the relationships between platform owners and complementors.

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Feng Zhu

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      4. The Provision of Relative Performance Feedback: An Analysis of Performance and Satisfaction, by Ghazala Azmat and Nagore Iriberri, Spring 2016
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    4. A Practitioner’s Guide to Estimation of Random‐Coefficients Logit Models of Demand, by Aviv Nevo, Winter 2000
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Recently Published Articles

Volume 28, Issue 3, Fall 2019 (current issue)

Exporting firms and retail internationalization: Evidence from France

Angela Cheptea, Charlotte Emlinger, and Karine Latouche
This paper questions the impact of the globalization of the retail sector on the export activity of origin country agri‐food firms. We use an original firm‐level database of French agri‐food exports that identifies the domestic suppliers of French retailers through certification with the private International Featured Standard (IFS). The results show that IFS certified French firms are more likely to export and export larger volumes than noncertified firms to markets where French retailers have established outlets.

Moral management in competitive markets

Steve Martin
The intrinsic motivation of a firm’s management for engaging in prosocial behavior is an important determinant of a firm’s social conduct. I provide the first model in which firms run by morally motivated managers engage in corporate social responsibility (CSR) in a competitive setting.

Biased recommendations from biased and unbiased experts

Wonsuk Chung and Rick Harbaugh
When can you trust an expert to provide honest advice? We develop and test a recommendation game where an expert helps a decision maker choose among two actions that benefit the expert and an outside option that does not. The results highlight that the transparency of expert incentives can improve communication, but need not ensure unbiased advice.

Wholesale price discrimination: Innovation incentives and upstream competition

Uğur Akgün and Ioana Chioveanu
In intermediate good markets where there are alternative supply sources, wholesale price discrimination may enhance innovation incentives downstream. We consider a vertical chain where a dominant firm and a competitive fringe supply imperfect substitutes to duopoly retailers which carry both varieties.

Repeated interaction in standard setting

Pierre Larouche and Florian Schuett
Standardization may allow the owners of standard‐essential patents to charge higher royalties than would have been negotiated ex ante. In practice, however, standard‐setting efforts are often characterized by repeated interaction and complementarities among technologies.

Technological and organizational capital: Where complementarities exist

Tobias Stucki and Daniel Wochner
This study analyzes the complementarities between technological and organizational capital within enterprises. Our empirical results show that whereas greater employee voice promotes firm productivity when combined with information technology, it harms firm productivity when combined with communication technology. On the other hand, flexible work design is positively associated with communication technology and negatively associated with information technology.

Points mechanisms and rewards programs

Emil Temnyalov
I study points programs, such as frequent flyer and other rewards programs, as a revenue management tool. I develop a two‐period contracting model where a capacity‐constrained firm faces consumers who privately learn their valuations over time.

Can platform competition support market segmentation? Network externalities versus matching efficiency in equity crowdfunding markets

Esther Gal‐Or, Ronen Gal‐Or, and Nabita Penmetsa
We investigate whether, in spite of the existence of cross‐market network externalities, platform competition can lead to segmentation of the two sides of the market served by the platforms.

Updates management in mobile applications: iTunes versus Google Play

Stefano Comino, Fabio M. Manenti, and Franco Mariuzzo
This paper focuses on a specific strategy that developers of mobile applications may use to stimulate demand: The release of updates. We develop a theoretical analysis that shows that developers have incentives to release updates when experiencing a drop in performance. The predictions of the model are then tested using an unbalanced panel of top 1,000 apps in iTunes and Google Play for five European countries.

Volume 28, Issue 2, Summer 2019

Calendar synchronization of gasoline price increases

Michael D. Noel
In many retail gasoline markets with Edgeworth price cycles, large and regular price increases occur on the same day of the week every week, that is, they are calendar synchronized. In this article, I test whether calendar synchronization leads to higher or lower consumer expenditures on gasoline compared to a world with cycles but without calendar synchronization.

Do discriminatory leniency policies fight hard‐core cartels?

Georg Clemens and Holger A. Rau
This paper experimentally analyzes the effects of nondiscriminatory and discriminatory leniency policies on hard‐core cartels. We design a mechanism to form a hard‐core cartel, which allows that multiple ringleaders emerge.  We find that firms create trust among other firms when acting as ringleaders. This signaling effect ultimately facilitates coordination in the explicit cartel.

Political contestability and public contract rigidity: An analysis of procurement contracts

Jean Beuve, Marian W. Moszoro, and Stéphane Saussier
Using a comprehensive set of contracts for a standard product, we compare procurement contracts in which the procurer is either a public administration or a private corporation. We find that public‐to‐private contracts feature more rigidity clauses than private‐to‐private contracts and that the use of rigidity clauses in public contracts rises when political risks are more salient. We argue that a significant part of the increased rigidity of public contracts is a contractual adaptation to limit political hazards from political opponents and interested third parties.

Vague lies and lax standards of proof: On the law and economics of advice

Mikhail Drugov and Marta Troya‐Martinez
This paper analyzes a persuasion game where a seller provides (un)biased and (im)precise advice and may be fined by an authority for misleading the buyers.

Competitive strategy for open and user innovation

Gastón Llanes
I study the incentives to open technologies in imperfectly competitive markets with user innovation. I find that large firms are less open and invest more in product development than small firms, and that firms react to greater openness from rivals by becoming more open.

Value capture in hierarchically organized value chains

Joachim Henkel and Alexander Hoffmann
We study how the structure of negotiations in a value chain affects the distribution of value among its members. To this end, we generalize the Shapley value and the core to hierarchical bargaining situations.

Media market concentration and pluralism

Torben Stühmeier
We study the relationship between market concentration and market variety, and thereby focus on two dimensions of variety, namely on internal variety and on external variety. In our setup, firms can expand their internal variety continuously around their focus point on a Salop‐circle. External variety then refers to the market supply of variety offered by all firms on the circle. We believe that this setting is particularly applicable to media.

Can social media lead to labor market discrimination? Evidence from a field experiment

Matthieu Manant, Serge Pajak, and Nicolas Soulié
In this paper, we investigate the role of social media as a source of information for recruiters to discriminate applicants. We set up a field experiment over a 12‐month period, involving more than 800 applications from two fictitious applicants which differed in their perceived origins, which is an information available only from their Facebook profiles.

Strategic attractiveness and release decisions for cultural goods

Paul Belleflamme and Dimitri Paolini
We study how producers of cultural goods can strategically invest in raising the attractiveness of their goods in order to secure the most profitable release dates. Results are consistent with the theoretical predictions, indicating that higher budget movies are released closer to seasonal demand peaks.

Volume 28, Issue 1, Spring 2019 – Special Issue on Platforms

The economics of markets and platforms

Daniel F. Spulber
Advances in the study of both markets and platforms contribute to economics. Platforms are typically digital markets, although platforms can designate markets generally. So, the economics of markets and the economics of platforms are one and the same.

The reflection problem in network effect estimation

Marc Rysman
This paper discusses the empirical identification of network effects in light of the reflection problem of Manski. I argue that models of indirect network effects present reasonable exclusion restrictions to address the challenges of the reflection problem.

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

Michael L. Katz
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. In this note, I identify several areas in which economics research could potentially make significant contributions to the practical antitrust treatment of platforms.

The importance of consumer multihoming (joint purchases) for market performance: Mergers and entry in media markets

Simon P. Anderson, Øystein Foros, and Hans Jarle Kind
Consumer “multihoming” (watching two TV channels, or buying two news magazines) has surprisingly important effects on market equilibrium and performance in (two‐sided) media markets. We show this by introducing consumer multihoming and advertising finance into the classic circle model of product differentiation.

Horizontal mergers between multisided platforms: Insights from Cournot competition

Joao Correia‐da‐Silva Bruno Jullien Yassine Lefouili Joana Pinho
This paper discusses the literature on horizontal mergers between multisided platforms and argues that the Cournot model can provide useful insights into the welfare effects of such mergers.

The status of workers and platforms in the sharing economy

Andrei Hagiu and Julian Wright
We consider whether workers who provide their services through online platforms, such as Handy and Uber, should be classified as independent contractors or employees.

A theory of multihoming in rideshare competition

Kevin A. Bryan and Joshua S. Gans
We examine competition among ridesharing platforms, where firms compete on both price and the wait time induced with idled drivers. We show that when consumers are the only agents who multihome, idleness is lower in duopoly than when consumers face a monopoly ridesharing platform. When drivers and consumers multihome, idleness further falls to zero as it involves costs for each platform that are appropriated, in part, by their rival.

Platform market competition with endogenous side decisions

Jay Pil Choi and Yusuke Zennyo
This paper develops a framework to analyze platform competition in two‐sided markets in which agents endogenously decide on which side of a platform to join. We characterize the equilibrium pricing structure and perform a comparative statics analysis on how the distribution of agents’ preferences affects the platforms’ profits.

Towards a theory of platform dynamics

Luís Cabral
I introduce a dynamic framework to analyze platforms. The (single) platform owner sets prices at the beginning of each period. Agents (buyers, sellers, readers, consumers, merchants, etc.) make platform membership decisions occasionally. I show that an optimal platform pricing addresses two externalities: across sides and across time periods. This results in optimal prices which depend on platform size in a nontrivial way

Volume 27, Issue 4, Winter 2018

Economic influence activities

Davin Raiha
Firms frequently make operational and strategy decisions to gain political influence. They locate plants, expand workforces, or choose suppliers, with the aim of affecting the economy and the electoral success of politicians. This behavior constitutes a nontraditional form of influence, which I refer to as economic influence activities (EIA). In this paper, I show how such activities influence policymaking and why firms may prefer it to more traditional influence activities such as campaign contributions.

Corporate social responsibility and product quality

Aleix Calveras and Juan‐José Ganuza
We study both theoretically and empirically the relationship between different types of corporate social responsibility (CSR) and a firm's product quality. We show that CSR may serve as a tool for a firm's product differentiation strategy, finding that both internal and external CSR enhance a firm's product quality.

On the role of outside options in wage renegotiation

Fengjiao Chen, Chiu Yu Ko, and Duozhe Li
We study a game‐theoretic model of wage renegotiation. A worker, after receiving a superior outside offer, initiates a wage renegotiation with his current employer. During the renegotiation, whenever a proposal is rejected, the worker decides whether to opt out. When the two parties are sufficiently patient, any wage level between the outside offer and the entire net surplus can be sustained in equilibrium. Opting out may also arise in equilibrium.

Contract contingency in vertically related markets

Emanuele Bacchiega, Olivier Bonroy, and Emmanuel Petrakis
We study the optimal precontractual arrangement offers of an upstream monopolist producing an essential input that may sell to two vertically differentiated downstream firms. A powerful supplier always opts for an exclusive contract. By contrast, a weaker supplier offers nonexclusive contracts and makes each of them contingent or noncontingent such as to guarantee the most favorable outside option in its negotiations.

Managerial turnover and entrenchment

Zenan Wu and Xi Weng
We consider a two‐period model in which the success of the firm depends on the effort of a first‐period manager (the incumbent) as well as the effort and ability of a second‐period manager. Our model predicts that it is optimal for the board to design a contract to induce entrenchment (respectively, anti‐entrenchment) if the signal regarding the incumbent manager's ability becomes sufficiently uninformative (respectively, informative).

On the determinants and consequences of informal contracting

Ricard Gil and Giorgio Zanarone
As documented by Macauley and others, informal contracts are pervasive in modern economies. Yet, systematic empirical evidence on them is still limited. In this paper, we provide a framework to investigate the determinants and consequences of informal contracting.

Platform pricing and consumer foresight: The case of airports

Ricardo Flores‐Fillol, Alberto Iozzi, and Tommaso Valletti
We analyze the optimal behavior of a platform providing essential inputs to downstream firms selling a primary and a second complementary good. Final demand is affected by consumer foresight, that is, consumers may not anticipate the ex post surplus from the secondary good when purchasing the primary good.

Peer‐to‐peer sharing in the lodging market: Evaluating implications for social welfare and profitability

Esther Gal‐Or
With a focus on the lodging market, we investigate the nature of competition between a peer‐to‐peer platform and a traditional lodging provider (hotel), in an environment where both possess the market power to affect the final lodging price established in the market.

Selling through referrals

Daniele Condorelli, Andrea Galeotti, and Vasiliki Skreta
We endogenize intermediaries' choice to operate as agents or merchants in a market where there are frictions due to asymmetric information about consumption values.