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.
Gaudin, Germain, and Alexander White.
"Vertical Agreements and User Access."
American Economic Journal: Microeconomics,
Firm Behavior: Theory
Market Structure, Pricing, and Design: Oligopoly and Other Forms of Market Imperfection
Firm Organization and Market Structure
Vertical Restraints; Resale Price Maintenance; Quantity Discounts
Information and Internet Services; Computer Software