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Quality Regulation on Two-Sided Platforms : Exclusion, Subsidization, and First-Party Applications

Managing the quality of complementary applications is vital to the success of a two-sided platform. While prior research has focused solely on restricting platform access based on a quality threshold, we compare three quality regulation strategies: (1) the platform excludes access to low-quality complementors, (2) it provides a fixed amount of subsidy to high-quality complementors, and (3) it develops its own high-quality applications in addition to those from third-party complementors. Our analyses reveal that the widely adopted exclusion strategy is a special case of the subsidization strategy, and it does not always benefit the platform. In contrast, both subsidization and first-party applications strategies render the platform owner better off, with higher profits, higher average quality, and a larger consumer network, but only subsidization always improves social welfare. In addition, the trade-off between subsidization and first-party applications strategies depends on the development cost of first-party applications and the fraction of high-quality complementors, but the relationship is not monotonic. Our results demonstrate that the platform does not have to sacrifice application quantity for higher application quality. With the right choices, it can profitably improve both measures simultaneously. This research provides concrete guidelines to help platform managers make decisions about regulating the quality of complementary applications.

Ketersediaan

Informasi Detail

Judul Seri

MANAGEMENT SCIENCE; Vol.68 No.6 June 2022

No. Panggil

-

Penerbit

: .,

Deskripsi Fisik

p. 4415-4434

Bahasa

English

ISBN/ISSN

-

Klasifikasi

NONE

Tipe Isi

-

Tipe Media

-

Tipe Pembawa

-

Edisi

-

Subjek

TWO-SIDED MARKET
PLATFORM ECOSYSTEM
QUALITY REGULATION
FIRST-PARTY APPLICATION
QUALITY THRESHOLD

Info Detail Spesifik

https://doi.org/10.1287/mnsc.2021.4075

Pernyataan Tanggungjawab

Peng Huang, Gaoyan Lyu, Yi Xu

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