Platform Pricing Structure and Moral Hazard
We study pricing by a two-sided platform when it faces moral hazard on the sellers? side. In doing so, we introduce an equilibrium notion of platform reputation in an infinite horizon model. We find that with transaction fees only, the platform cannot eliminate the loss of reputation induced by moral hazard. If registration fees can be levied, moral hazard can be overcome. The registration fee determines the participation threshold of sellers and extracts them, while (lower) transaction fees provide incentives for good behavior. This provides a motivation for platforms to use registration fees in addition to transaction fees.
|Date of creation:||2013|
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- Jean‐Charles Rochet & Jean Tirole, 2006.
"Two‐sided markets: a progress report,"
RAND Journal of Economics,
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- Rochet, Jean-Charles & Tirole, Jean, 2005. "Two-Sided Markets : A Progress Report," IDEI Working Papers 275, Institut d'Économie Industrielle (IDEI), Toulouse.
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- Hanna Halaburda & Mikolaj Jan Piskorski, 2010. "Competing by Restricting Choice: The Case of Search Platforms," Harvard Business School Working Papers 10-098, Harvard Business School, revised Jan 2013.
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- Guillaume Roger & Luis I. Vasconcelos, 2010. "Platform Pricing Structure and Moral Hazard," Discussion Papers 2010-28, School of Economics, The University of New South Wales.
- Roger, G & Vasconcelos, LI, 2013. "Platform Pricing Structure and Moral Hazard," Economics Discussion Papers 10006, University of Essex, Department of Economics.
- repec:rje:randje:v:37:y:2006:3:p:720-737 is not listed on IDEAS
- Bolt, Wilko & Tieman, Alexander F., 2008. "Heavily skewed pricing in two-sided markets," International Journal of Industrial Organization, Elsevier, vol. 26(5), pages 1250-1255, September.
- Ettore Damiano & Hao Li, 2007. "Price discrimination and efficient matching," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 30(2), pages 243-263, February.