Economics Webinar - Platform Competition and Equilibrium Proportional Fee

3:00pm - 4:30pm
Zoom Meeting: 968 790 9998 (password 5166644)

We study platform competition where each platform may charge its merchants in two possible ways: a proportional fee that is a fraction of the product transaction price, or a unit fee that is independent of the transaction price. Proportional fee is shown to appear in equilibrium on a platform that is more efficient than its rival, or when merchants compete in the Cournot fashion. While the equilibrium fee level may rise or fall as compared to unit fee, proportional fee always improves social welfare, and it always hurts competing merchants. Finally, an inefficient platform may successfully break into a market using a fee scheme that is advantageous than the one used by the incumbent platform, and such entry does not necessarily hurt welfare.

Venue Opening Hour
2:45pm
Event Format
Speakers / Performers:
Prof. Wen Zhou
The University of Hong Kong

https://www.fbe.hku.hk/people/wen-zhou/

Language
English
Recommended For
Alumni
Faculty and staff
PG students
Organizer
Department of Economics
Contact

Julie by email: fnjuwong@ust.hk

 

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