Club good intermediaries

Simon Loertscher and Leslie Marx

International Journal of Industrial Organization, 2017, vol. 50, issue C, 430-459

Abstract: The emergence and ubiquitous presence in everyday life of digital goods such as songs, movies, and e-books give renewed salience to the problem of providing public goods with exclusion. Because digital goods are typically traded via intermediaries like iTunes, Amazon, and Netflix, the question arises as to the optimal pricing mechanism for such club good intermediaries. We derive the direct Bayesian optimal mechanism for allocating club goods when the mechanism designer is an intermediary that neither produces nor consumes the goods, and we develop an indirect mechanism that implements this mechanism. We also derive sufficient conditions for the intermediary-optimal mechanism to be implementable with revenue sharing contracts, which are widely used in e-business.

Keywords: Revenue maximization; Excludable public goods; Two-sided platforms; Optimal pricing; Digital goods (search for similar items in EconPapers)
JEL-codes: C72 D82 L13 (search for similar items in EconPapers)
Date: 2017
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:indorg:v:50:y:2017:i:c:p:430-459

DOI: 10.1016/j.ijindorg.2016.05.007

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