Integration of Primary and Resale Platforms

Abstract

<jats:p> 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 United States 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 article 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. In addition, platform competition in the resale market may harm consumers. This article further shows that these insights apply in other markets (e.g. used goods, peer-to-peer product-sharing markets) and provides suggestive empirical support for the theoretical results. </jats:p>

Platform Competition: A Systematic and Interdisciplinary Review of the Literature

“…Researchers also began to study (horizontal) mergers between platforms (e.g., Chandra & Collard-Wexler, 2009; Correia-da-Silva, Jullien, Lefouili, & Pinho, 2019; Jeziorski, 2014; Zou & Jiang, 2020), usually anticipating that such mergers would lead to levels of market power that had the potential to harm social welfare. Notably, however, the few studies on platform mergers have tended to find that such mergers did not result in higher prices or harm consumer welfare (contrary to typical antitrust economics predictions).…”

Effects of Cost‐Information Transparency on Intertemporal Price Discrimination

“…In practice, consumers’ purchase timing decisions can sometimes be influenced by other factors, such as consumers’ uncertainty for their product valuation that can be resolved over time (e.g., Kahn and Meyer 1991, Guo and Zhang 2012, Jiang et al. 2017, Zou and Jiang 2020, Zou et al., 2020). Consumers can be averse to such uncertainty and can resolve it by postponing their purchase decisions until they learn more about their valuations for the product (e.g., through word of mouth, in‐store inspections, or online reviews by earlier consumers).…”