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Strategic delegation in two-sided markets

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

FEP Working Papers from Universidade do Porto, Faculdade de Economia do Porto

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.

Keywords: Two-sided markets; tipping; spatial competition; strategic delegation; managerial incentives. (search for similar items in EconPapers)
JEL-codes: D43 L11 L13 R12 (search for similar items in EconPapers)
Pages: 37 pages
Date: 2014-05
New Economics Papers: this item is included in nep-bec, nep-com, nep-ind, nep-mic and nep-net
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