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A Rationale for Tying Merchants' Membership of Platforms Serving Independent Markets. This thesis was submitted to the University of Manchester for the degree of Doctor of Social Sciences in the Faculty of Humanities by Michael King during September 2010. I analyses the effect of tying sellers' membership of a monopoly platform to membership of another platform, which operates in an otherwise competitive market. Visa's contentious use of the honour-all-cards rule to tie their debit and credit cards is an example of such a tie-in. There has been a move to judge tying cases under "rule of reason", which permits dubious practices when they are indispensable to creating economic benefit. However, a proportion of the extra-surplus must be passed on to consumers ("pass on test"). Rochet and Tirole (2008) claimed that tying payment cards raised Visa's profit without harming end-users. However, this doesn't fully address the concerns of regulators. Hence, my thesis investigates whether tying satisfied the "pass on test". Part I: In Rochet-Tirole (2008) sellers operate in two independent markets (ç and d). Network A runs platforms in both markets; and Network B only operates in market d. The price-level (buyer-fee plus seller-fee) on a network's platforms is exogenously determined but they can choose the price-structure. My study extended this framework by explicitly modelling competition in the product market. Part II: Platform competition leads to a price-structure that maximizes the net-benefit received by buyers and sellers. In contrast, a monopoly platform extracts most of the surplus by encouraging excessive use of payment-cards. Therefore, if tying is prohibited, then competition for sellers in market d leads to an optimal price-structure. However, Network A extracts most of the surplus created by its monopoly platform. Finally, if the average transaction-cost, τ, exceeds the price-level, ρ, then the net-benefit generated by a monopoly platform remains strictly positive. Part III: By tying its platforms Network A can exclude Network B. However, Network A is unable to exclude Network B just by matching the net-benefit it generates; rather, it must "compensate" sellers for the extra competition they face from being on the same network. Therefore, if tying is permitted, then the total net-benefit on Network A exceeds the maximum benefit that can be generated by a single platform. Part IV: It was found that if transaction-fees, ρ, are high relative to transaction-costs, τ, then tying always increases the consumer surplus. However, if transaction-fees, ρ, are low relative to transaction-costs, τ, then tying doesn't benefit consumers; and will reduce the consumer-surplus if their transaction-costs are sufficiently high.

Magíster en Economía Aplicada. Ingeniero Civil Industrial / El presente trabajo estudia la infinita interacción descentralizada de un mercado two-sided, el cual se comporta de manera análoga a una fiesta, donde hombres y mujeres se emparejan a partir de propuestas de baile. En cada instante, cualquiera de los dos podría abandonar al otro para obtener una mejor asignación, teniendo todos un factor de descuento común $\delta$. Utilizando como refinamiento al equilibrio Markoviano perfecto (restringido en cuanto a la formación de nuevas parejas), se analiza la relación entre el conjunto de matchings estables $\Matchingset^*$ y el conjunto de asignaciones $\Agreeset_{\delta}$ ante el cual ya no se generen más ``cambios'' dentro de la fiesta, entendiendo a estos últimos como ``acuerdos''. Los resultados son que: (1) todo acuerdo debe ser estable, es decir, $\Agreeset_{\delta} \subseteq \Matchingset^*$; (2) en caso de existir más de un \textit{matching} estable, existe un $\hat{\delta}$ fijo tal que $\Agreeset_{\delta \geq \hat{\delta}} \subset \Matchingset^*$; (3) los incentivos opuestos del mercado son los generan que matchings estables puedan no ser acuerdos en la fiesta. La contribución de esta investigación viene dada por mostrar que los incentivos opuestos entre los dos lados del mercado, no permiten a los agentes alcanzar o mantener asignaciones estables de manera perpetua a lo largo del tiempo.

This study is focused on two-sided assembly line balancing problems of type-I and type-II. This problem is encountered in production environments where a two-sided assembly line is used to produce physically large products. For type-I problems, there is a specified production target for a fixed time interval and the objective is to reach this production capacity with the minimum assembly line length used. On the other hand, type-II problem focuses on reaching the maximum production level using a fixed assembly line and workforce. Two different mathematical models for each problem type are developed to optimally solve the problems. Since the quality of the solutions by mathematical models decreases for large-sized problems due to time and memory limitations, two heuristic approaches are presented for solving large-sized type-I problem. The validity of all formulations is verified with the small-sized literature problems and the performances of the methods introduced are tested with large-sized literature problems.

Word of mouth has been playing an essential role while consumers make their purchase decision since ever, and its diffusion is becoming much faster via the internet nowadays. Surfing the internet gathering information before making the purchase, the so-called ¡uWisdom of Crowds¡vshopping pattern is taking its shape and possibly going to become the main trend in the future. Thus, electronic word of mouth does play an important part during the process of consumers¡¦ decision making, and more and more consumers start to ponder what to believe on the internet. As a result, trust is becoming the key factor if the consumers can take electronic word of mouth into their consideration or not. This research discusses how message sideness appeal and emotion in electronic word of mouth affect consumers¡¦ trust under a positively framed message and a negative framed message. This research adopts experimental method, distributes questionnaire and analyze the data with SPSS12.0. The results present message sideness appeal and emotion have impacts on consumers¡¦ trust. Two-sided appeal can cause higher consumers¡¦ trust than one-sided appeal whether under a positively framed message or a negative framed message. Emotion also plays an important part between message sideness and consumers¡¦ trust during the process of diffusion of electronic word of mouth. The results can not only help the word-of-mouth senders to develop an appropriate writing pattern to make electronic word of mouth more credible and effective, but also provide the business a brand-new point of view and some practical suggestions to develop a new marketing strategy.

This dissertation comprises three essays analyzing various economic questions relating to open-source software development. The common thread linking these essays is the long-term sustainability of the open-source software development model, which is largely built on unpaid contributions from individual developers scattered across the world. The first essay develops a theoretical analysis of the market for operating systems as two-sided platforms, modeling the effects of competition and compatibility between a proprietary platform developed by a profit-maximizing firm, and an open platform (a public good developed by volunteers). Looking at the impacts on the proprietary platform firm, and application developer firms and users of both platforms, I find that under certain circumstances, a proprietary platform can find it profitable to become compatible with the open platform. However, it is always optimal in terms of social welfare to have compatibility between platforms. The second essay uses a laboratory experiment to examine how these characteristics and levels of motivations that are heterogeneous across individuals interact to result in sustainable, non-zero levels of contribution to open source software. There is a pronounced “leadership effect,” with subjects playing in the first position invariably contributing more frequently than those in the second position, and so on. Heterogeneity preserves the leadership effect, but increases contributions across the board, and eliminates the pattern of declining individual and total group contributions over time frequently observed in public goods experiments. The third essay studies the micro-foundations of open-source software contributions and provides an empirical examination of developer motivations using survey data. If open-source contributions and education are both signals of ability, then their impact on income is likely to be linked. They may be complements if open source contributions reinforce the signal from education by showing that one stands out from the crowd, or they might be substitutes if open-source development replaces expensive education in honing programming skills by offering more immediate feedback. Using an instrumental variables framework to deal with the endogeneity of the education and contribution choices, I find that leading an open-source project and completing college are complementary practices, so that the signaling and reputation-building aspect dominates.

With the adoption of European Commission directives in 2003 related to open data,member States of EU were encouraged to provide citizens access to previously inaccessiblepublic sector data. This published public data could be used, reused and distributed free ofcharge. Following these directives, many municipalities within Sweden and Europe ingeneral created open data portals for publishing public sector data. With such datapublished, expectations of third party innovations were highly envisaged. This thesis adoptsa qualitative research approach to investigate the challenges and proposed solution ofusing open data for third party innovation. The thesis identifies various aspects ofgovernance, architecture and business model that public organizations should take intoconsideration in order to attract third party innovations on open data. Specifically, theresults of this thesis suggest that in order for open data to act as a platform for innovation,there is need for integration of open data policies. This involves developing commonstandards relating to governance, data format, and architecture. Harmonizing thesestandards across municipalities within Sweden and Europe, would provide the muchneededuser based which is necessary to enhance the two-sided nature of innovations onopen data platforms.

These days, it is hard to discuss innovation and the creative economy without mentioning platforms, which have become core strategy for dominating the market. An accurate understanding of platform business is a key factor in being a successful platform provider, so discussions of platform strategies need to be invigorated, value chains need to be analysed, and theoretical factors need to be seriously considered. Corporations are yearning for new innovations and worry about the absence of an efficient and sustainable growth model. First, this thesis analyses how the value chain and value stream are changed in the platform business model in order to explore value chains and value streams in the two-sided market, which has a distinct group of users on both sides. It proposes three types of platform business strategy which will serve as a frame of reference for analysing the impact of the different value chains on platform businesses. Second, this thesis indicates how a step-by-step business strategy based on the perspective of dynamic approach could be constructed. This research identifies four major stages of platform business (entry stage, growth stage, expansion stage, and maturity stage), and different core elements and strategies exist for each stage. These serve as the conceptual frameworks with which to build a platform business model. The key contributions of this research are as follows. Firstly, the main differences and features of the literature reviewed were suggested with collective action and strategic choice perspectives from different academic approaches. Secondly, this study extends the understanding of the value chain that was the critical strategic element of a corporation in the platform business. Thirdly, this research presents the core elements and strategies for each of the four major growth stages of platform business with the dynamic approach, depending on the distinctive features of the contents and platforms.

The design and operation of a two-sided platform require a variety of decisions to facilitate a match between sellers (capacity) and buyers (demand). Many platforms deploy analytic capabilities to leverage rich information, on both demand and capacity, that is available in real-time. This dissertation research explores design decisions, such as price structure and quality controls, and allied analytic capabilities in order to document their impact on platform governance. These decisions are tested in the context of ride-sharing platform by positing three fundamental challenges that must be accounted for effective design: (1) spatial distribution of capacity and demand that allows for capacity spillovers, (2) buyer’s sentiment biases, and (3) seller’s relocation biases. These challenges are assessed in three separate but related essays. The first essay investigates how the policies for setting surge prices should be designed under capacity spillovers. Using a data set from Uber’s operations, we estimate a spatial panel model to reveal its surge pricing structure that accounts for spatial dependency. Allied counterfactual analysis illustrates the limitations of a spot pricing policy (i.e., a policy that does not account for spillovers). The second essay assesses the impact of buyer’s sentiment bias, ranging from optimism to pessimism, on the platform’s decision to control seller quality. Platforms face a trade-off between ensuring high-quality sellers and guaranteeing enough sellers such that wait-time is lowered. We formally characterize an optimal exclusion threshold on seller quality in the presence of sentiment bias. We also examine strategies that a platform can access to benefit from buyer’s behavioral biases. Results document the impact of seller quality on a platform’s profitability and social welfare. In the last essay, we focus on the seller’s relocation behavior. There is a debate in the literature on whether sellers’ willingness to relocate across demand zones in order to chase surging prices is rewarded in a ride-sharing platform setting. Using multiple machine learning algorithms, we classify rewarding behaviors with different pricing structures under a variety of circumstances. Results provide guidance on how to provide incentives while managing the dynamics of spatially distributed capacity.

Platforms are the critical players driving the digital economy. My thesis focuses on the platform economy, especially the competitive advantage of platforms. On the one hand, what factors affect the competitive advantage of platforms? How does the platform form the competitive advantage? These questions are related to platform strategy. On the other hand, does the competitive advantage of platforms harm social welfare? This question is related to regulatory issues. The first chapter of my dissertation studies how different aspects of user effects drive value in two-sided markets. We first develop a model of inter-temporal network effects and within-period network effects of users to estimate different aspects of user effects. We then propose a model to estimate the user lifetime value in two-sided markets and examine the effectiveness of the user growth strategy. Finally, we discuss platform heterogeneity and corresponding platform strategies. Using Groupon data, we empirically estimate different aspects of user effects and examine how they vary. We show that the strength of the inter-temporal same-side network effect affects user stickiness, further influencing the persistence of the within-period cross-side network effect. Strong within-period cross-side network effects alone cannot sustain value creation. Our findings remind managers not to overemphasize user growth when the inter-temporal network effects are weak and should instead focus on platform design that increases user stickiness. The second chapter of my dissertation examines the impact of a potential policy of opening a platform's big data to banks on FinTech lending. We show that the policy promotes competition in FinTech lending and the loan price decreases. However, its impact on financial inclusion is unclear. We discuss how the efficiency of the banking system and the value of big data affect the policy outcome. We also consider the equilibrium of a data market where the platform can sell big data to banks. We show that FinTech can best promote financial inclusion in this case, but the loan price is the same as when the platform monopolizes big data. Since financial inclusion is important for entrepreneurship and innovation, the regulator should carefully examine the context in their countries before making a policy choice. The third chapter of my dissertation studies the impact of cross-market acquisitions of giant platforms on start-ups' entry into emerging markets. Our model shows that the acquisition reduces the post-acquisition entry but may increase the pre-acquisition entry. The net effect of the acquisition on the entry is positive when the pre-acquisition gain is greater than the post-acquisition loss. We then discuss three cases in which a giant platform strategically increases its market position in the acquisition. The net effect of the acquisition on start-ups' entry varies in different cases. Our findings indicate that regulators should analyze the specific situation of each acquisition before making a decision to approve an acquisition.