Periodic Reporting for period 3 - DIPVAR (Digital Platforms: Pricing, Variety and Quality Provision)
Okres sprawozdawczy: 2023-01-01 do 2023-08-31
We also derive general conditions under which the hybrid mode benefits or harms consumers. This benefits consumers when products on the platform are undifferentiated, for example, at the Amazon Standard Identification Number (ASIN) level, by lowering prices in a suite of models: a gatekeeper platform facing a competitive fringe of sellers, when fringe sellers also have their own channels substitutable to the platform; when the gatekeeper platform with fringe sellers competes against a big seller with market power on a differentiated alternative channel; and when the gatekeeper platform hosts only a big seller with market power. This might harm consumers when a big firm sells both on the platform and its alternative channel or when products on the platform are differentiated.
We develop a model of competition for a superior input between two firms asymmetric in their demand potential. The superior input reduces the cost of quality and can either be possessed exclusively by one firm or non-exclusively by both. We show that exclusive dealing is a unique equilibrium when the input changes the competitiveness of either firm (affecting its equilibrium quality). Otherwise, there also exists a non-exclusive equilibrium. We illustrate that exclusive dealing harms consumers but might increase welfare and provide implications for digital platforms.
We study news quality provision on internet by modelling the editorial standard, a cutoff for how confident a news firm must be to post an article. We illustrate conditions under which the firm posts news later (with more information) or earlier (with less information) on the internet compared to offline publishing. We also build a theory model studying the effect of the frequency of communication on the information provided between two strategic players: a sender of information and a receiver.
We develop a novel methodology to study data collection by e-commerce platforms based on the marginal value of information. This enables us to study how platforms collect data and related distortions compared to efficient data collection.
Using the theory model, we expect to highlight fundamental differences and similarities between private labels of retailers and hybrid business models of platforms. We aim to study different demand specifications and different forms of platform contracts with sellers to do a robustness analysis. Next, we aim to link variety provision of the monopoly platform to variety provision of multi-product monopolists. We expect to provide the properties for distributions of consumer tastes for variety that would generate different types of variety distortions arising from the firm’s choices.
We plan to extend the model to platform competition and different qualities of third-party products, and analyze the incentives of competing platforms in choosing which products to allow on the platform (curation).
We extend the scope of markets the project contributes to by considering quality provision in media markets by modelling the editorial standard choice of a publisher (how confident the firm should be to post an article) in a dynamic environment where the firm faces uncertainty about the likelihood that the story is correct. We also study the impact of targeting algorithms of a social media platform on news quality provided by a publisher. To do that we model a publisher that chooses the quality of a fact and opinion article, how to prioritize these articles on its website, and analyze how the social media platform targeting algorithms affect these decisions. This analysis will provide implications for regulation of social media platforms to improve content quality.
We next consider environments where a monopoly platform can collect information on buyers’ demand and so has more precise information on demand than third-party sellers to study strategic information acquisition and disclosure of a monopoly platform. We expect to illustrate the welfare impact of the platform’s demand information disclosure to sellers. We also expect to address the question of how much costly information a firm would acquire about its customers to determine the price to show to a given customer.
The model of asymmetric platform competition for the exclusive product is the first to study endogenous quality choices of platforms when exclusivity provisions affect equilibrium quality provision of asymmetric platforms. Building on this, we plan to analyze the direction of innovation by a firm as a response to dynamic platform competition for exclusivity of this innovation. We expect the results of this work to highlight potential distortions in direction and amount of innovation due to the acquisition of the innovator or exclusive provisions by dominant digital platforms.