Abstract

http://ssrn.com/abstract=2317715
 


 



Turning the Page on Business Formats for Digital Platforms: Does Apple's Agency Model Soften Competition?


Øystein Foros


Norwegian School of Economics (NHH) - Department of Business and Management Science

Hans Jarle Kind


Norwegian School of Economics & Business Administration (NHH); CESifo (Center for Economic Studies and Ifo Institute); Norwegian School of Economics (NHH) - Department of Economics

Greg Shaffer


University of Rochester - Simon Business School

August 29, 2013

CESifo Working Paper Series No. 4362

Abstract:     
The agency model used by Apple and other platform providers such as Google allows upstream firms (content providers like book publishers and developers of apps) to choose the retail prices of their products (RPM) subject to a fixed revenue-sharing rule. We show that (i) this leads to higher prices if the competitive pressure is higher downstream than upstream; (ii) upstream firms earn positive surplus even when platform providers have all the bargaining power; and (iii) with asymmetric business formats (where only some platform providers use the agency model), a retail most-favored-nation clause leads to retail prices that resemble the outcome under industry-wide RPM.

Number of Pages in PDF File: 35

Keywords: the agency model, resale price maintenance, most-favored nation clauses, revenue sharing

JEL Classification: L130, L410, L420

working papers series


Download This Paper

Date posted: August 29, 2013  

Suggested Citation

Foros, Øystein and Kind, Hans Jarle and Shaffer, Greg, Turning the Page on Business Formats for Digital Platforms: Does Apple's Agency Model Soften Competition? (August 29, 2013). CESifo Working Paper Series No. 4362. Available at SSRN: http://ssrn.com/abstract=2317715

Contact Information

Øystein Foros
Norwegian School of Economics (NHH) - Department of Business and Management Science ( email )
Helleveien 30
Bergen, NO-5045
Norway
Hans Jarle Kind (Contact Author)
Norwegian School of Economics & Business Administration (NHH) ( email )
Helleveien 30
Bergen, NO-5045
Norway
+47 55 583 890 (Phone)
+47 55 583 901 (Fax)
CESifo (Center for Economic Studies and Ifo Institute)
Poschinger Str. 5
Munich, DE-81679
Germany
Norwegian School of Economics (NHH) - Department of Economics
Helleveien 30
N-5035 Bergen
Norway

Greg Shaffer
University of Rochester - Simon Business School ( email )
Feedback to SSRN


Paper statistics
Abstract Views: 605
Downloads: 94
Download Rank: 161,983

© 2014 Social Science Electronic Publishing, Inc. All Rights Reserved.  FAQ   Terms of Use   Privacy Policy   Copyright   Contact Us
This page was processed by apollo1 in 0.297 seconds