First-party content, commitment and coordination in two-sided markets
By: Andrei Hagiu, Daniel Spulber
Contributors: Spulber, Daniel; Harvard Business School
Series: Working paper / Harvard Business School -- 11-123; Working paper (Harvard Business School) -- 11-123.
Publisher: Harvard Business School
Published: 2011
Place of publication: [Boston]
Language: eng
Number of pages: 42
Description: We study the effect of two-sided platforms' ability to invest in first-party content on their optimal pricing strategies. If first-party content and third-party seller participation are complements (substitutes) then: i) a monopoly platform facing favorable expectations invests more (less) in first-party content than a platform facing unfavorable expectations; ii) the platform facing unfavorable expectations is more likely to subsidize sellers (buyers) when its investment in first-party content is higher. These results hold with both simultaneous and sequential entry of the the two sides. With two competing platforms - an incumbent facing favorable expectations and an entrant facing unfavorable expectations - and singlehoming on one side of the market, the incumbent always invests (weakly) more in first-party content relative to the case in which it is a monopolist.
Notes: "May 2011" -- Publisher's website.

"June 1, 2011" -- added t.p.

Includes bibliographical references.