Platform pricing choice: Exclusive deals or uniform prices

Shiva Shekhar*

*Corresponding author for this work

Research output: Contribution to journalArticleScientificpeer-review

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Abstract

Platforms choose between offering exclusive deals or uniform prices to content providers in a setting where content providers can multi-home or single-home. We find that platforms offer exclusive deals for sufficiently large or sufficiently small values of standalone benefits. For sufficiently large or small standalone benefits, there are relatively large or small proportion of multi-homers to single-homers, exclusive deals allow to extract more efficiently from the content provider type that is relatively large in the market. Hence, it becomes more lucrative to employ exclusive deals regardless of the pricing strategy chosen by rival platform. We find that for standalone benefits being sufficiently small, exclusive deals equilibrium is also the industry profit enhancing outcome. On the other hand, when standalone benefits are large, exclusive pricing deals equilibrium leads to a prisoner's dilemma type of outcome.
Original languageEnglish
Pages (from-to)159-186
JournalReview of Network Economics
Volume20
Issue number3
DOIs
Publication statusPublished - Jun 2022

Keywords

  • exclusive deals
  • uniform prices
  • two-sided markets
  • platforms
  • platform competition
  • network effects
  • 2-SIDED MARKETS
  • COMPETITION

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