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Platform Governance

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  • Tat-How Teh

Abstract

Platforms that intermediate trades—such as Amazon, Airbnb, and eBay—play a regulatory role in deciding how to govern the marketplaces they create. We propose a framework to analyze a platform's nonprice governance design and its incentive to act in a welfare-enhancing manner. We show that the platform's governance design can be distorted toward inducing insufficient or excessive seller competition, depending on the nature of the fee instrument employed by the platform. These results are illustrated with micro-founded applications to a platform's control over seller entry, information provision and recommendations, quality standards, and search-design choices.

Suggested Citation

  • Tat-How Teh, 2022. "Platform Governance," American Economic Journal: Microeconomics, American Economic Association, vol. 14(3), pages 213-254, August.
    • Handle: RePEc:aea:aejmic:v:14:y:2022:i:3:p:213-54
    DOI: 10.1257/mic.20190307
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    Cited by:

    1. Koo, Wesley W., 2024. "Hybrid governance of platform entrepreneurs," Research Policy, Elsevier, vol. 53(2).
    2. Teh, Christopher & Wang, Chengsi & Watanabe, Makoto, 2024. "Strategic limitation of market accessibility: Search platform design and welfare," Journal of Economic Theory, Elsevier, vol. 216(C).
    3. Etro, Federico, 2023. "Platform competition with free entry of sellers," International Journal of Industrial Organization, Elsevier, vol. 89(C).
    4. Doan, Thanh & Manenti, Fabio M. & Mariuzzo, Franco, 2023. "Platform competition in the tablet PC market: The effect of application quality," International Journal of Industrial Organization, Elsevier, vol. 88(C).
    5. Huang, Yangguang & Xie, Yu, 2023. "Search algorithm, repetitive information, and sales on online platforms," International Journal of Industrial Organization, Elsevier, vol. 88(C).
    6. Tan, Yinliang (Ricky) & Yu, Chuanbin & Liu, Yang & Zheng, Quan, 2024. "Agency models in online platforms: A review of recent developments and future prospects," European Journal of Operational Research, Elsevier, vol. 319(3), pages 679-695.

    More about this item

    JEL classification:

    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • L15 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Information and Product Quality
    • L23 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Organization of Production
    • L81 - Industrial Organization - - Industry Studies: Services - - - Retail and Wholesale Trade; e-Commerce
    • M37 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Marketing and Advertising - - - Advertising

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