Two-sided Model Research Articles

Who benefits from increased competition among sellers on B2C platforms?

We introduce within-group external effects in the two-sided singlehoming model of Armstrong (2006). First, we propose a general characterization of the platform access fees at the symmetric equilibrium of the game. Second, we combine this general formulation with a specific modeling of the relationship between buyers and sellers on B2C platforms, so as to analyze how changes in the underlying characteristics of the product market affect the equilibrium of the game. We show that sellers may be better off, and buyers worse off, in markets with more sellers. We also show that sellers and buyers prefer full product differentiation while platforms prefer no differentiation.

Strategic Agents and Vertical Relationship in Two-Sided Markets

This paper introduces two modifications to standard two-sided market models. In the first modification, one side of the agents (advertisers) make strategic choices (on quality of their ads) which affect the utility of agents joining the same platform on the other side. We show that this feature of strategic agents leads to qualitatively different econometric specifications for the estimation of group externality parameters. Relative to benchmark case, prices on both sides are lower under strategic agents, benefiting the agents at the cost of platforms. In the other modification, we introduce independent retailers between platforms and agents on the other side (readers). Our results suggest that this modification has no impact on estimating the group externality parameters. However, equilibrium prices on either side depend on group externality parameters at both sides. This is in sharp contrast to standard results where prices on one side depend only on group externality parameter of the other side. In the special case where each platform is split into two independent divisions, we find that equilibrium price is the same across all four divisions. Moreover, this common price depends on the product of the group externality parameters of the two sides.

A Two-Sided Entry Model with Manufacturer-Retailer Contracts

We investigate the economic determinants of contract structure and entry in an empirical setting with transfer contracts, which specify that manufacturers directly sell their products in retail stores while retailers collect the sales revenue and return a transfer to the manufacturers. Using a unique dataset describing the entry decisions of clothing manufacturers into a retail department store, we estimate a two-sided, asymmetric-information entry model. We then use this model to compare profit estimates under transfer contracts to counterfactual profit estimates obtained under common alternative contract formats. Results show that, when adverse selection is severe, transfer contracts dominate other contract formats from the retailer’s perspective; otherwise the common alternative contract formats dominate.

Bundling, à la carte pricing and vertical bargaining in a two-sided model

We develop a two-sided market model with an upstream–downstream structure. More specifically, the platform consists of two rival upstream firms and a downstream monopolist. Each upstream firm negotiates the input price (license fee) with the downstream monopolist and also chooses the amount of advertising that is embedded in the good it sells to the downstream monopolist. The downstream monopolist can offer the two goods either on an à la carte basis or as a bundle. We use this model to understand the incentives to bundle and the welfare properties of bundling in a two-sided market framework. We also contribute to the ongoing debate on à la carte pricing in the TV industry, where the two upstream firms can be viewed as two rival TV networks and the downstream monopolist as a cable operator. We show that an à la carte regulation will raise consumer surplus and downstream profit, while it will decrease the profits of the upstream TV networks.

23andMe: a new two-sided data-banking market model.

BackgroundSince 2006, the genetic testing company 23andMe has collected biological samples, self-reported information, and consent documents for biobanking and research from more than 1,000,000 individuals (90 % participating in research), through a direct-to-consumer (DTC) online genetic-testing service providing a genetic ancestry report and a genetic health report. However, on November 22, 2013, the Food and Drug Administration (FDA) halted the sale of genetic health testing, on the grounds that 23andMe was not acting in accordance with federal law, by selling tests of undemonstrated reliability as predictive tests for medical risk factors. Consumers could still obtain the genetic ancestry report, but they no longer had access to the genetic health report in the United States (US). However, this did not prevent the company from continuing its health research, with previously obtained and future samples, provided that consent had been obtained from the consumers concerned, or with health reports for individuals from other countries. Furthermore, 23andMe was granted FDA authorization on February 19, 2015, first to provide reports about Bloom syndrome carrier status, and, more recently, to provide consumers with “carrier status” information for 35 genes known (with high levels of confidence) to cause disease.DiscussionIn this Debate, we highlight the likelihood that the primary objective of the company was probably two-fold: promoting itself within the market for predictive testing for human genetic diseases and ancestry at a low cost to consumers, and establishing a high-value database/biobank for research (one of the largest biobanks of human deoxyribonucleic acid (DNA) and personal information).SummaryBy dint of this marketing approach, a two-sided market has been established between the consumer and the research laboratories, involving the establishment of a database/DNA biobank for scientific and financial gain. We describe here the profound ethical issues raised by this setup.

Tipping in two-sided markets with asymmetric platforms

This paper examines tipping in the Armstrong (2006) two-sided market model. By adding simple cost asymmetries, we show that the model is quite robust to differences in network size and deviations from 50–50 market share. It well represents situations where asymmetries compensate for one another; for example, one platform might incur marginal costs to court developers and make up for it with lower costs to users. Our tests also make clear that the Armstrong model implicitly contains an intrinsic utility–a value intrinsic to the platform and not its complementary goods–even when no model parameter explicitly expresses it. These results improve interpretation of the many studies that use the Armstrong model for policy analysis.

Running head: Value from health information exchange

Policy makers and practitioners argue that electronic exchange of clinical data across the healthcare system is a key component of improving health service delivery in the United States. Provider administrators, however, question the strategic value of participation in health information exchanges (HIEs) and remain reluctant to participate. Existing research fails to adequately illuminate the potential value derived from HIEs by participating organizations. This paper addresses this gap by developing a conceptual model informed by the complementary theoretical perspectives of the relational view and systems theory to specify both a provider organizationʼs internal conditions and the HIE structure necessary for both financial accrual and quality improvement. This two-sided model can assist policymakers as they attempt to encourage HIE development, as well as provider and HIE leadership that seek to benefit from HIEs. The propositions developed from this model can also help guide researchers as they evaluate the impact of HIEs.

Chaotic-periodic transition in a two-sided minority game

Phase transitions are being used increasingly to probe the collective behaviors of social human systems. In this study, we propose a different way of investigating such transitions in a human system by establishing a two-sided minority game model. A new type of agents who can actively transfer resources are added to our artificial bipartite resource-allocation market. The degree of deviation from equilibria is characterized by the entropy-like quantity of market complexity. Under different threshold values, Qth, two phases are found by calculating the exponents of the associated power spectra. For large values of Qth, the general motion of strategies for the agents is relatively periodic whereas for low values of Qth, the motion becomes chaotic. The transition occurs abruptly at a critical value of Qth. Our simulation results were also tested based on human experiments. The results of this study suggest that a chaotic-periodic transition related to the quantity of market information should exist in most bipartite markets, thereby allowing better control of such a transition and providing a better understanding of the endogenous emergence of business cycles from the perspective of quantum mechanics.

Net Neutrality: A Fast Lane to Understanding the Trade-offs

The last decade has seen a strident public debate about the principle of “net neutrality.” The economic literature has focused on two definitions of net neutrality. The most basic definition of net neutrality is to prohibit payments from content providers to internet service providers; this situation we refer to as a one-sided pricing model, in contrast with a two-sided pricing model in which such payments are permitted. Net neutrality may also be defined as prohibiting prioritization of traffic, with or without compensation. The research program then is to explore how a net neutrality rule would alter the distribution of rents and the efficiency of outcomes. After describing the features of the modern internet and introducing the key players, (internet service providers, content providers, and customers), we summarize insights from some models of the treatment of internet traffic, framing issues in terms of the positive economic factors at work. Our survey provides little support for the bold and simplistic claims of the most vociferous supporters and detractors of net neutrality. The economic consequences of such policies depend crucially on the precise policy choice and how it is implemented. The consequences further depend on how long-run economic trade-offs play out; for some of them, there is relevant experience in other industries to draw upon, but for others there is no experience and no consensus forecast.

A Hyper-Erlang Jump-Diffusion Process and Applications in Finance

This paper studies the first passage time problem for a reflected two-sided jump-diffusion risk model with the jumps having a hyper-Erlang distribution. The authors give the explicit closed-form expression for the joint Laplace transform of the first passage time and the overshoot for the reflected process. Finally, the formula is applied to the ruin problem under the barrier dividend strategy and the pricing of the Russian option.

Price cap regulation in a two-sided market: Intended and unintended consequences

This paper studies intended and unintended consequences of price cap regulation in the two-sided payment card market. The recent U.S. debit card regulation was intended to lower merchants' card acceptance costs by capping interchange fees at the issuer cost, but for small-ticket transactions the interchange fee instead rose post-regulation. To address the puzzle, I construct a two-sided market model and show that card demand externalities between large-ticket and small-ticket transactions rationalize card networks' pricing response. Based on the model, I provide a welfare assessment of the issuer cost-based interchange regulation and discuss alternative regulatory approaches.

On asymmetric generalization of the Weibull distribution by scale–location mixing of normal laws

Two approaches are suggested to the definition of asymmetric generalized Weibull distribution. These approaches are based on the representation of the two-sided Weibull distributions as variance–mean normal mixtures or more general scale–location mixtures of the normal laws. Since both of these mixtures can be limit laws in limit theorems for random sums of independent random variables, these approaches can provide additional arguments in favor of asymmetric two-sided Weibull-type models of statistical regularities observed in some problems related to stopped random walks, in particular, in problems of modeling the evolution of financial markets

The Duality of Structure and Action: Outline for a Weberian Research Programme

In my book Foundations in Sociology, I depicted Max Weber's approach as an alternative to Marx and Durkheim on the one hand, Parsons, Mead, Habermas and Luhmann on the other. I tried to demonstrate that Weber has provided us with a viable research program which merits further elaboration. In this essay, I want to spell out the outline of such a Weberian research program. It can be regarded as a third sociology, overcoming the opposition between methodological individualism and holism. It is based on methodological relationism and on a two-sided and multi-level explanatory model, employing the notion of the duality of structure and action. Its analytical power is illustrated with reference to Weber's study on ascetic Protestantism and on the economic ethic of the world religions.

A New Algorithm For Solving Transportation Problem With Network Connected Sources

Solving transportation problems where products to be supplied from one side(sources) to another (demands) with a goal to minimize the overall transportation cost represents an activity of great importance. Most of the works done in the field deals with the problem as two-sided model (Sources such as factories and Demands such as warehouses) with no connections between sources or demands.
 However, real world transportation problems may come in another model where sources are connected in a network like graph in which each source may supply other sources in a specific cost. The work in this paper suggests an algorithm and a graph model with mathematical solution for finding the minimum feasible solution for such widely used transportation problems. In this work, the graph representing the problem in which all sources are connected together in a network model with specific cost on each edge is converted into a new graph where additional virtual sources representing supplies between sources are added to the graph , new costs between the added sources and the demands are also calculated, and then modified Kruskal’s algorithm is applied to get the minimum feasible solution.
 The proposed solution is a straight forward model with strong mathematical and graph models. It can be widely used for solving real world transportation problems with feasible time and space complexity where time complexity of O(E2 + V2) is required, where E represents the number of edges and V represents the number of vertices. Different numerical examples were used to study the effectiveness and correctness of the proposed algorithm.

On the Secrecy Rate Region of Multiple-Access Wiretap Channel With Noncausal Side Information

In this paper, we study the two transmitter multiple-access channel (MAC) with noncausal side information at one (single-sided) or both (two-sided) of the encoders in the presence of an external wiretapper (WT) and under individual and collective secrecy constraints. Our work consists of four parts. First, we consider the discrete memoryless (DM-MAC-WT) case of the model and derive inner and outer bounds on the secrecy capacity region under both of the secrecy constraints. Second, the results are extended to the Gaussian memoryless case [Gaussian multiple-access channel WT (GMAC-WT)] in detail and are used to illustrate numerically that the secrecy rate region is enlarged by increasing the power of the interference signal which is known noncausally at the encoder. Third, we analyze the strong interference regime as an important regime in GMAC with side information and show that under collective secrecy constraint, we can achieve the secrecy capacity region of the single-sided channel asymptotically for a special case in which the signal and noise powers satisfy specific constraints. To the best of our knowledge, this capacity region is the first one obtained for GMAC-WT. Finally, we show that our results include previous works as its special cases for both the single-sided and two-sided channel models.

Will I make it? Self-perceived employability in the unemployed

The literature on career mobility has emphasized the role of perceived employability in handling occupational transitions. Following a multidimensional approach to the concept of perceived employability, this study developed a twosided model to analyse the self-employability perceptions of the unemployed. Combining two dimensions (beliefs relating to the occupational opportunities in the labour market and self-efficacy to intercept these opportunities), the model hypothesized four different profiles of self-perceived employability. The study aimed to verify this model and to explore how the different profiles of self-perceived employability are related to mental health, intention and motives for using employment agencies and reemployment outcomes. The research involved 136 workers who, after losing their job, applied to an employment agency. The study had a four-wave, multi-method design (questionnaire at the first contact with the agency and objective data on reemployment at 3, 6 and 9 months after the first contact). Self-perceived employability profiles were obtained through a two-step cluster analysis based on two variables (job search self-efficacy and perceived reemployment chances). The two-step cluster analysis resulted in a four-cluster structure, confirming the hypothesized model. The analysis showed significant differences between clusters, distress levels, and short- and medium-term employment outcomes: people who evaluate themselves as less employable have higher levels of distress and lower intentions to utilize the agency’s services. The relationship between the employability profile and reemployment at 3, 6 and 9 months shows interesting trends. Our study contributes to the literature on employability, highlighting the relevance of considering different self-perceived employability profiles of unemployed people. Moreover, its suggestions can be useful for career counsellors in profiling workers who are at risk of psychological distress during occupational transitions and who could give up searching for a job.

Bayesian repeated games and reputation

We consider two-person undiscounted and discounted infinitely repeated games in which every player privately knows his own payoffs (private values). Under a further assumption (existence of uniform punishment strategies), the Nash equilibria of the Bayesian infinitely repeated game without discounting are payoff-equivalent to tractable, completely revealing, equilibria. This characterization does not apply to discounted games with sufficiently patient players. We show that in a class of public good games, the set of Nash equilibrium payoffs of the undiscounted game can be empty, while limit (perfect Bayesian) Nash equilibrium payoffs of the discounted game, as players become increasingly patient, do exist. These equilibria share some features with the ones of two-sided reputation models.

Posttraumatic Growth in Breast Cancer Survivors: Constructive and Illusory Aspects

This study investigated the impact of a building-resilience intervention on coping and posttraumatic growth (PTG) in a convenience sample of 94 breast cancer survivors. PTG was divided into constructive and illusory components, based on the two-sided Janus face model (Maercker & Zoellner, 2004). We operationalized constructive PTG as an improvement in both PTG and coping, and illusory PTG as an improvement in PTG only. An 8-session group intervention was delivered to 49 women (mean age = 51.5 years, SD = 10.7) who completed self-report questionnaires at baseline and at 6 months follow-up; a control group of 45 women only completed questionnaires. More than half the participants (n = 53; 56.38%) reported increased PTG at 6 months (mean change = 0.56, SD = 0.48, η(2) = .58). The increase in both PTG and positive coping was significantly greater in the intervention group than the control group (B = 0.23 for PTG, and B = 0.35 for positive coping). Further, a higher proportion of constructive PTG (vs. illusory PTG) was reported by the participants in the intervention group (89.3%), as compared to the control group (56.3%; z = 2.57). The distinction between constructive and illusory PTG has clinical implications for interventions promoting coping and growth among cancer survivors.

Tying to Foreclose in Two-Sided Markets

Abstract This paper analyzes the effect of tied-in sales by an essential goods monopolist in a two-sided market. In a two-sided market, the essential goods monopolist may tie a good essential for users, such as an operating system, with a platform, such as a media player, in the user side of the market, to extract profits not from the user side, but from the developer side of the market. From this simple idea, we build a simple two-sided market model and show how the essential goods monopolist may tie a platform with the essential goods on the user side of the market to foreclose a rival firm from the developer side of the market. We also analyze various welfare impacts of tying and discuss the antitrust implications.

The Impact of Within-Platform Competition in Two-Sided Business Models

We analyze the impact of exogenous changes in competition within one side of a two-sided market on the optimal pricing of both sides. We take into account both its impact through indirect network externalities and its impact through higher competition in the marketplace. We find that within-platform competition increases the price charged to the other side, while its impact on the same side price is ambiguous. We test our hypotheses in the U.S. airport industry, exploiting an increase in within airport competition driven by a change in regulation. As hypothesized, we estimate that an increase of airline competition within an airport increases commercial revenues per passenger, only in airports that adopt a platform business model. We also investigate the impact of passenger type and airport pricing approach on the airport response to this exogenous change.