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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.

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.

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.

Master of Arts / Department of Economics / Tracy M. Turner / This paper attempts to shed some light on the issue of net neutrality by examining the extent to which Internet usage is efficiently allocated under current conditions. I discuss the unique features of Internet usage which make it a good that markets will tend to provide at an inefficient level. I then discuss alternative pricing regimes that will move the market for Internet usage to efficiency. I conclude with a discussion of the current economic research on the topic.

In the first paper, using a dataset of the records of Texas Real Estate Agents, I reexamine the findings of Hsieh and Moretti (2003) regarding the inefficiency of free entry in real estate industry: first, I point out one important source of misidentification in that paper's analysis of the relationship between home prices and the number of real estate agents in a city. This misidentification stems from not including the ratio of houses sold in a city to its labor force size as an explanatory variable. Failure to account for this variable will result in inflated coefficient for the effect of home prices on the percentage of real estate agents in a city's labor force. Second, I analyze the effect of home prices on productivity of real estate agents. Empirical evidence supports theory prediction of inverse relationship between home prices and productivity of its real estate agents (measured as the number of houses sold per agent) and the empirical results in Hsieh and Moretti (2003). Third, I investigate the relationship between the extra wages of real estate agents (defined as average earning net of agents' outside option) and home prices in a city. In support for free entry, I find no evidence of any such relationship. In theory, free entry potentially leads to social inefficiency. This paper finds strong empirical evidence consistent with excess entry into Texas Residential Real Estate Brokerage Industry and studies the effects of heterogeneity and future uncertainty on such inefficiencies. I develop a dynamic model of entry and exit with heterogeneous agents and modify the predictions of the earlier literature. I show that the heterogeneity among (real estate) agents results in a weaker relationship between the real estate commission fees and the number of real estate agents. I also show that the models developed for static cases in the previous papers are special cases of the more general model in this paper. The model allows us to explain the lower business stealing effect compared to static and homogeneous models that is observed in the data. To address the issue of excess entry, I separate the business stealing effect from demand driven entry and find that on average 75 percent of entry is due to business stealing. To evaluate free entry, I control for agents' outside options and find that the extra wages of the real estate agents do not vary with housing prices. The objective of the third paper is to study the determinants of commission rates in the two-sided market of real estate brokerage industry and explain the emergence of the MLS and its impact on commission rates. In addition to their commission rates, real estate agencies decide on their MLS policies as well: they can either list the property with the MLS and share information about it, or not list the property with the MLS. If a property is listed with the MLS, all MLS subscribers can see the listing and send their potential buyers to see that property. Potential buyers can go to any agency to purchase such a property. If the property is \textit{not} listed with the MLS, to buy a house, a buyer must go to the same agency that the seller has signed up with. Since sellers pay the commission fees, and buyers no longer have to go to the same agency, with MLS listing, buyers choose the closest agency regardless of the commission rates charged by the agencies. Therefore, changes in the commission rates only change the affiliation of the sellers and not that of the buyers. This leads to a softer competition under MLS listing as agencies compete only in the seller side of the market. The softer competition and resulting higher commission rates are desirable to the agencies. They prefer the MLS listing outcome and given the optimal strategies after observing each other's listing decisions, agencies weakly prefer listing to no listing. I show that the one period game has two Nash Equilibria in which either both real estate agencies choose to list their houses with the MLS, or both decide not to list their houses with the MLS. The no listing equilibrium forces buyers to work through that agency's agents and effectively ties the both sides of the market. The higher commission rate equilibrium of the game allows buyers to choose either agency and reduces the competition to the sellers side. Softer competition in turn, results in higher equilibrium commission rates and higher profits along the equilibrium path. / text

With increasing computational power and more elaborate software comes greater opportunities to complement traditional research methods with alternative methods. In this paper we argue for why the area of two-sided markets could benefit from this alternative approach and attempt to implement a theoretical model in an agent-based framework. By first replicating the theoretical findings in this framework we expand the model in increments in different directions through introducing different set of heterogeneity and behavioral limitations on our actors to see how the theoretical model develops. Only changing the model in increments found the analytical outcome to be robust for many of our changes, in this regard we have not managed to successfully take advantage of the full potential of the agent-based framework.

La thèse s’intéresse à l’économie de l’industrie des télécommunications et à sa régulation. La première partie est dédiée au déploiement du réseau fixe de fibre optique. L’étude de différentes méthodes de régulation permet de comparer les approches en termes de vitesse et d’efficacité du déploiement ainsi que de bien-être de consommateurs. Un modèle technico-économique est construit afin d’estimer les coûts du réseau d’accès de fibre en France et de comparer les résultats des différentes approches de régulation en termes quantitatifs. La deuxième partie applique la théorie de marchés bifaces au domaine des communications électroniques. Elle aborde le sujet de la régulation concurrentielle de marchés bifaces et montre en quoi leur traitement doit être spécifique, en s’appuyant sur des résultats théoriques et études de cas. Un modèle de la discrimination par les prix sur des marchés bifaces est proposé qui révèle les facteurs qui déterminent le caractère favorable ou défavorable de l’impact de la discrimination. La troisième partie étudie la question de l’impact de la différenciation tarifaire en fonction de la destination d’appel sur le marché des communications mobiles. Un modèle théorique est construit et ensuite calibré sur la base de l’exemple du marché français en 2003. Il est montré que des baisses all-net des tarifs vers tous les réseaux simultanément entreprises par tous les opérateurs sont plus avantageux pour les consommateurs que des baisses on-net du tarif intra-réseau. / The thesis focuses on the economics of the telecommunications industry and on its regulation. The first part is dedicated to the deployment of the fixed network of the optical fibre. The study of different regulation methods allows to compare the approaches in terms of the speed and efficiency of deployment as well as the consumers’ welfare. We construct a technico-economic model of the fibre access network in France in order to compare the results of different regulation approaches in quantitative terms. The second part applies the theory of two-sided markets to the field of electronic communications. It deals with the issue of competition regulation on two-sided markets and shows in what way their treatment should be specific, based on theoretic results and case studies. A model of price discrimination on two-sided markets is proposed that reveals the factors determining favourable or unfavourable impact of discrimination. The third part studies the impact ofthe price differentiation depending on the call destination on the mobile communications market. A theoretic model is constructed and then calibrated based on the example of the French market in 2003. It is shown that the all-net reduction of the tariffs towards all the networks and by all the operators is more beneficial for consumers than the on-net reduction of the intra-network tariffs.

A indústria de cartões de pagamento é definida pela literatura acadêmica como um mercado de dois lados. Um dos lados é o mercado de emissão, que realiza a comercialização de cartões para os portadores. O outro lado é o mercado de credenciamento, que efetua a afiliação de estabelecimentos comerciais para que estes aceitem pagamentos com cartões. O foco deste trabalho é o mercado de credenciamento no Brasil. O objetivo do estudo foi analisar a concentração do mercado brasileiro de credenciamento no período entre 2010, quando houve o início da intervenção governamental na indústria de cartões, e 2016. Com a imposição do fim do monopólio no credenciamento das principais marcas mundiais, Visa e Mastercard, os órgãos reguladores buscavam estimular a entrada de novos concorrentes, a fim de obter uma melhor eficiência econômica e maior bem-estar social. Os resultados deste trabalho evidenciaram redução na concentração do mercado com a entrada de novos concorrentes, embora os índices permaneçam elevados. O trabalho buscou analisar, também, a variação das taxas cobradas dos estabelecimentos comerciais neste período. Neste aspecto, os resultados mostram que as taxas médias anunciadas pelas credenciadoras, cobradas normalmente de pequenos estabelecimentos, aumentaram para as transações de débito, ao contrário do que se esperava para um mercado com mais concorrentes, e se mantiveram estáveis para transações de crédito. As elevadas taxas de intercâmbio, a falta de interoperabilidade dos sistemas de captura das transações e a continuidade de contratos de exclusividade para aceitação de cartões entre emissores e credenciadores representaram dificuldades para que os objetivos dos órgãos reguladores fossem plenamente alcançados no período analisado. / The payment cards industry is a two-sided market, as defined by the academic literature. In one side there is the card issuing market that accomplishes the commercialization of cards for the cardholders. The other side is the acquiring market that makes the affiliation of merchants to accept payments with cards. The focus of this work is the acquiring market in Brazil. The objective of the study is to analyze the concentration of the Brazilian acquiring market in the period between 2010, when there was the beginning of the government intervention in the card industry, to 2016. With the mandate to end the acquiring monopoly of the main world brands, Visa and Mastercard, the regulatory agencies sought to stimulate the entrance of new competitors, in order to obtain a better economic efficiency and greater social welfare. The study results showed a reduction in market concentration with the entry of new competitors, although the concentration remains high. The work also aimed to analyze the variation of prices charged to merchants in this period. In this respect, the results show that the average rates announced by the acquirers, applied normally to small businesses, increased for debit transactions, contrary to what was expected for a market with more competitors and remained stable for credit transactions. The high interchange rates, the lack of interoperability of transaction capture systems and the continuation of exclusivity agreements for the acceptance of cards between issuers and acquirers represented difficul,ties for the objectives of the regulatory bodies to be fully achieved in the period under review.

Den digitala strukturomvandling vårt samhälle genomgår har bidragit till att den digitala kompetensen är stor oavsett åldersgrupp. Idag är internet en stor del av vår vardag och används dagligen, både privat, i skolan och i arbete. En konsekvens av digitaliseringen är att stora förändringar har skett i hur handel av varor och tjänster sker och att utbudet av dessa har ökat. Trots att digitaliseringen har stor påverkan på vårt samhälle, är fortfarande forskning inom området till viss del begränsad. Ett exempel på detta är forskningsområdet two-sided markets (TSM). Begreppet TSM har sedan millennieskiftet använts för att beskriva marknader med två kundsidor där handel mellan dessa två sker. I och med digitaliseringen har nya företag och marknader trätt fram där Netflix, Spotify och AirBnb är några exempel på företag som agerar på olika typer av TSM. I denna studie undersöks en typ av TSM, digital begagnathandel, där de två sidorna består av köpare och säljare av begagnade varor. Kunders beteende har även det förändrats i och med digitaliseringen och användningen av internet. Hur kunder genomför digitala köp sker nödvändigtvis inte på samma sätt som i traditionella fysiska miljöer. Användandet skiljer sig även åt mellan olika kundgrupper och åldrar. Att företag förstår kunders digitala beteende och hur de väljer plattform är därmed av stor vikt. Nya företag har under de senaste åren trätt in på marknaden för digital begagnathandel och konkurrensen förväntas öka. Vilken affärsmodell och strategi företag använder samt design på plattformar blir därmed avgörande för framgång på marknaden. Den yngre målgruppen, framtidens konsumenter, är mer eller mindre uppväxta med internet och har därför god kunskap om det. De anses ha enorm köpkraft och är därför viktiga kunder för företag som agerar på en TSM. Genom att förstå deras beteende och hur de väljer plattform kan företag vara konkurrenskraftiga. Denna studie har genom kvalitativa intervjuer undersökt hur personer i åldrarna 18–25 år väljer plattform för digital begagnathandel. I denna studie har vi besvarat frågeställningen: Vilka faktorer påverkar valet av plattform för digital begagnathandel? Resultatet av studien visar att fem faktorer påverkar valet av plattform för digital begagnathandel. Dessa är: användarupplevelse, kundbeteende, social påverkan, prispåverkan och säkerhet. De fem faktorerna har även underliggande attribut som påverkar dessa faktorer. Studien visar även att faktorerna påverkar till olika grad. Social påverkan påverkar till störst grad, därefter kommer prispåverkan, säkerhet och kundbeteende, och den faktor som visat ha minst påverkan är användarupplevelse. Faktorerna påverkar hela beslutsprocessen överlag, dock i varierande grad. Vi kan även konstatera att om köp är återkommande förändras beslutsprocessen och vissa steg kan alterneras eller hoppas över.