Integration of Primary and Resale Platforms

Zou, Tianxin and Baojun Jiang. "Integration of Primary and Resale Platforms." Journal of Marketing Research, Forthcoming

44 Pages Posted: 19 Jul 2018 Last revised: 18 May 2020

See all articles by Tianxin Zou

Tianxin Zou

University of Florida - Warrington College of Business Administration

Baojun Jiang

Washington University in Saint Louis - John M. Olin Business School

Date Written: March 13, 2020

Abstract

Consumers can buy concert tickets from primary platforms (e.g., Ticketmaster) or from consumer-to-consumer resale platforms (e.g., StubHub). Recently, Ticketmaster has entered and been trying to control the resale market by prohibiting consumers from reselling on competing resale platforms. Several states in the U.S. have passed or are discussing laws requiring tickets to be transferrable on any resale sites, worrying that platform integration—Ticketmaster controlling both the primary and the resale platforms—will increase ticket service fees and harm musicians and consumers. This paper establishes a game-theoretic framework and shows that the opposite can happen: platform integration can lower the service fees in both markets, alleviating double marginalization in the primary market and benefiting the musician and consumers. Moreover, with platform integration, the presence of a small number of scalpers can counterintuitively reduce the ticket price and benefit the musicians and consumers. Additionally, platform competition in the resale market may harm consumers. This paper further shows that these insights apply in other markets, e.g., used-good or peer-to-peer product-sharing markets, and provides suggestive empirical support for the theoretical results.

Keywords: platform, channel, event ticket, pricing, retail, resale, consumer-to-consumer, performing arts

JEL Classification: L41, D43, M38

Suggested Citation

Zou, Tianxin and Jiang, Baojun, Integration of Primary and Resale Platforms (March 13, 2020). Zou, Tianxin and Baojun Jiang. "Integration of Primary and Resale Platforms." Journal of Marketing Research, Forthcoming, Available at SSRN: https://ssrn.com/abstract=3203293 or http://dx.doi.org/10.2139/ssrn.3203293

Tianxin Zou (Contact Author)

University of Florida - Warrington College of Business Administration ( email )

Gainesville, FL 32611
United States

Baojun Jiang

Washington University in Saint Louis - John M. Olin Business School ( email )

One Brookings Drive
Campus Box 1156
St. Louis, MO 63130-4899
United States
3149353315 (Phone)

HOME PAGE: http://apps.olin.wustl.edu/faculty/Jiang/

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