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Price and quality decision of a monopoly platform for transaction with shipping

Author

Listed:
  • Tetsuya Shinkai

    (School of Economics, Kwansei Gakuin University)

  • Naoshi Doi

    (Otaru University of Commerce- Economics)

Abstract

This paper theoretically examines pricing and quality decisions of a monopoly platform facilitating transactions that involve physical shipping. In our model, the platform provides two types of transaction services (a standard service and a "premium" service with high-quality delivery of a transacted item) and decides a membership fee, transaction fees, and the quality of the premium service. We conduct comparative statics with respect to shipping costs. It is shown that when shipping costs are increased, the directions of changes in the platform's decision variables are ambiguous, depending on the nature of the increased shipping costs. For example, an increase in shipping costs may increase the quality and decrease the membership fee.

Suggested Citation

  • Tetsuya Shinkai & Naoshi Doi, 2023. "Price and quality decision of a monopoly platform for transaction with shipping," Discussion Paper Series 252-2, School of Economics, Kwansei Gakuin University, revised Jul 2023.
    • Handle: RePEc:kgu:wpaper:252-2
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Platform monopoly; Menu-pricing; Quality decisions; Two-sided market.;
    All these keywords.

    JEL classification:

    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L15 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Information and Product Quality

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