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Strategic delegation in two-sided markets

Author

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  • Vitor Miguel Ribeiro

    (Vitor Miguel Ribeiro - FEP and CEF.UP - Vitor)

Abstract

In a two-sided market duopoly, we investigate the effects of delegating long run restrictive and unrestrictive decisions to managers by the platforms' owners, the effects of the platforms' ownership establishing long run decisions without managers and the impacts of asymmetric regimes between platforms in terms of profitability, consumer surplus and total welfare. The fact that our analysis is focused on platforms introduces inter-group externalities. We find that for sufficiently low intensity of the inter-group externality, the owners of symmetric platforms should take the long run decisions by themselves. However, for an intermediate level of the inter-group externality, the owners of symmetric platforms should delegate the long run decision to their managers. Finally, for sufficiently high level of the inter-group externality, only tipping equilibria occur. Under an asymmetric environment, that is, one platform owner establishes long run decisions and the other owner delegate's long run decisions to their manager the long run decisions should be taken by the platform's owners.

Suggested Citation

  • Vitor Miguel Ribeiro, 2014. "Strategic delegation in two-sided markets," FEP Working Papers 536, Universidade do Porto, Faculdade de Economia do Porto.
    • Handle: RePEc:por:fepwps:536
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    File URL: http://www.fep.up.pt/investigacao/workingpapers/wp536.pdf
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    References listed on IDEAS

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    More about this item

    Keywords

    Two-sided markets; tipping; spatial competition; strategic delegation; managerial incentives.;
    All these keywords.

    JEL classification:

    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)

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