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- Publisher Website: 10.1111/joie.12279
- Scopus: eid_2-s2.0-85118293545
- WOS: WOS:000713261000001
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Article: Proportional Fee vs. Unit Fee: Competition, Welfare, and Incentives
Title | Proportional Fee vs. Unit Fee: Competition, Welfare, and Incentives |
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Authors | |
Issue Date | 2021 |
Citation | The Journal of Industrial Economics, 2021, Forthcoming How to Cite? |
Abstract | This paper compares social welfare for a unit versus a proportional fee on competing networks. When demand is sub-convex or isoelastic, proportional fee welfare dominates unit fee and the comparison is independent of network competition. When demand is super-convex, however, unit fee welfare dominates proportional fee if network competition is sufficiently weak. Dominance of unit fee is more likely when network competition weakens or if merchants must single-home. For competing networks, proportional fee is each network’s dominant strategy but often leads to a Prisoners’ Dilemma that hurts not only networks but also merchants. |
Persistent Identifier | http://hdl.handle.net/10722/307594 |
ISI Accession Number ID |
DC Field | Value | Language |
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dc.contributor.author | Gu, D | - |
dc.contributor.author | Yao, Z | - |
dc.contributor.author | Zhou, W | - |
dc.date.accessioned | 2021-11-12T13:34:52Z | - |
dc.date.available | 2021-11-12T13:34:52Z | - |
dc.date.issued | 2021 | - |
dc.identifier.citation | The Journal of Industrial Economics, 2021, Forthcoming | - |
dc.identifier.uri | http://hdl.handle.net/10722/307594 | - |
dc.description.abstract | This paper compares social welfare for a unit versus a proportional fee on competing networks. When demand is sub-convex or isoelastic, proportional fee welfare dominates unit fee and the comparison is independent of network competition. When demand is super-convex, however, unit fee welfare dominates proportional fee if network competition is sufficiently weak. Dominance of unit fee is more likely when network competition weakens or if merchants must single-home. For competing networks, proportional fee is each network’s dominant strategy but often leads to a Prisoners’ Dilemma that hurts not only networks but also merchants. | - |
dc.language | eng | - |
dc.relation.ispartof | The Journal of Industrial Economics | - |
dc.title | Proportional Fee vs. Unit Fee: Competition, Welfare, and Incentives | - |
dc.type | Article | - |
dc.identifier.email | Zhou, W: wzhou@hku.hk | - |
dc.identifier.authority | Zhou, W=rp01128 | - |
dc.identifier.doi | 10.1111/joie.12279 | - |
dc.identifier.scopus | eid_2-s2.0-85118293545 | - |
dc.identifier.hkuros | 330385 | - |
dc.identifier.volume | Forthcoming | - |
dc.identifier.isi | WOS:000713261000001 | - |