Vertical Agreements and User Access

American Economic Journal: Microeconomics (Forthcoming)

49 Pages Posted: 10 Aug 2020 Last revised: 12 Oct 2020

See all articles by Germain Gaudin

Germain Gaudin

University of Freiburg - College of Economics and Behavioral Sciences

Alexander White

Tsinghua University - School of Economics & Management

Multiple version iconThere are 2 versions of this paper

Date Written: October 6, 2020

Abstract

Platforms acting as sales channels for producers often charge users for access, via a subscription fee or a markup on hardware. We compare two common forms of vertical pricing agreement that platforms use with sellers: per-unit and proportional fees. In particular, we analyze the critical role that user access plays on prices, profits, and welfare under both forms of agreement. We characterize this role and show how it potentially overturns standard results saying that proportional fees lead to lower prices and higher profits.

Keywords: Platforms, User Access, Per-Unit vs. Proportional Fees, Wholesale vs. Agency Agreements, Unit vs. Ad Valorem Taxation, Antitrust

JEL Classification: D21, D40, L23, L4, L42, L51, L82, L86

Suggested Citation

Gaudin, Germain and White, Alexander, Vertical Agreements and User Access (October 6, 2020). American Economic Journal: Microeconomics (Forthcoming), Available at SSRN: https://ssrn.com/abstract=3670451 or http://dx.doi.org/10.2139/ssrn.3670451

Germain Gaudin

University of Freiburg - College of Economics and Behavioral Sciences

Freiburg, D-79085
Germany

Alexander White (Contact Author)

Tsinghua University - School of Economics & Management ( email )

Mailbox A-44
Weilun Building
Beijing, 100084
China

HOME PAGE: http://alex-white.net

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