Platform Pricing Structure and Moral Hazard

Resumo/Abstract: We study pricing by a monopoly platform that matches buyers and sellers in an environment with cross-market externalities. Our innovation consists of introducing moral hazard on the sellers' side and an equilibrium notion of platform reputation in an infinite horizon model. With linear fees the platform can mitigate, but not eliminate, the loss of reputation induced by moral hazard. If lump-sum fees can be levied, moral hazard can be overcome. The up-front lump-sum fees determine the participation threshold of sellers and extracts them, while (lower) transactions fees provide incentives for good behavior. This breaks the equivalence of lump-sum payments and linear fees (Rochet and Tirole (2006)). We draw implications for the impact of subsidies (Caillaud and Jullien (2003)).

Outros seminários / Other seminars: Programa completo / Full programme.