Research Summary
Research Summary
Exclusivity and Control (joint with A. Hagiu)
Description
We analyze platform competition for content in the presence of
strategic interactions between content distributors and content
providers. Contrary to standard results concerning double
marginalization and pricing of complementary goods, we prove that a
platform gaining exclusive access to content may prefer to
relinquish control over pricing of that content and the associated
revenues to the content provider as a result of the incentive to
reduce price competition at the platform level. We also show that
this may lead to counterintuitive results concerning the likelihood
of exclusivity: higher quality content may in fact be less likely to
end up exclusive to one platform.