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Platform Pricing Choice: Exclusive Deals or Uniform Prices

Authors
  • Shekhar, Shiva
Type
Published Article
Journal
Review of Network Economics
Publisher
De Gruyter
Publication Date
Sep 27, 2021
Volume
20
Issue
3
Pages
159–186
Identifiers
DOI: 10.1515/rne-2017-0016
Source
De Gruyter
Keywords
License
Yellow

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.

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