Private Contracts in Two-sided Markets
نویسندگان
چکیده
We study a two-sided market in which a platform mediates between sellers and buyers, and signs private contracts with sellers. We compare this market with (i) a one-sided market with public contracts, and (ii) a two-sided market with public contracts. We find that equilibrium royalties can be positive or negative in a one-sided market with public contracts, are negative in a twosided market with public contracts, and are positive in a two-sided market with private contracts. Thus, the privacy of contracts has a significant effect on the equilibrium price structure. We also show that private contracts lead to lower profit, consumer surplus, and welfare than public contracts.
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