Person: Hagiu, Andrei
Loading...
Email Address
AA Acceptance Date
Birth Date
Research Projects
Organizational Units
Job Title
Last Name
Hagiu
First Name
Andrei
Name
Hagiu, Andrei
8 results
Search Results
Now showing 1 - 8 of 8
Publication Marketplace or Reseller?(INFORMS, 2015-04-03) Hagiu, Andrei; Wright, JulianIntermediaries can choose between functioning as a marketplace (on which suppliers sell their products directly to buyers) or as a reseller (purchasing products from suppliers and selling them to buyers). We model this as a decision between whether control rights over a non-contractible decision variable (the choice of some marketing activity) are better held by suppliers (the marketplace-mode) or by the intermediary (the reseller-mode). Whether the marketplace- or the reseller-mode is preferred depends on whether independent suppliers or the intermediary have more important information relevant to the optimal tailoring of marketing activities for each specific product. We show that this tradeoff is shifted towards the reseller-mode when marketing activities create spillovers across products and when network effects lead to unfavorable expectations about supplier participation. If the reseller has a variable cost advantage (respectively, disadvantage) relative to the marketplace, then the tradeoff is shifted towards the marketplace for long-tail (respectively, short-tail) products. We thus provide a theory of which products an intermediary should offer in each mode. We also provide some empirical evidence that supports our main results.Publication Search Diversion and Platform Competition(Elsevier, 2014) Hagiu, Andrei; Jullien, BrunoPlatforms use search diversion in order to trade off total consumer traffic for higher revenues derived by exposing consumers to unsolicited products (e.g., advertising). We show that competition between platforms leads to lower equilibrium levels of search diversion relative to a monopoly platform when the intensity of competition is high. On the other hand, if there is only mild competition, then competing platforms induce more search diversion relative to a platform monopolist. When platforms charge consumers fixed access fees, all equilibrium levels of search diversion under platform competition are equal to the monopoly level, irrespective of the nature of competition. Furthermore, relative to platforms that cannot charge such fees, platforms that charge positive (negative) access fees to consumers have weaker (stronger) incentives to divert search.Publication The New Patent Intermediaries: Platforms, Defensive Aggregators and Super-Aggregators(American Economic Association, 2013) Hagiu, Andrei; Yoffie, DavidThe patent market consists mainly of privately negotiated, bilateral transactions, either sales or cross-licenses, between large companies. There is no eBay, Amazon, New York Stock Exchange, or Kelley's Blue Book equivalent for patents, and when buyers and sellers do manage to find each other, they usually negotiate under enormous uncertainty: prices of similar patents vary widely from transaction to transaction, and the terms of the transactions (including prices) are often secret and confidential. Inefficient and illiquid markets, such as the one for patents, generally create profit opportunities for intermediaries. We begin with an overview of the problems that arise in patent markets, and how traditional institutions like patent brokers, patent pools, and standard-setting organizations have sought to address them. During the last decade, a variety of novel patent intermediaries have emerged. We discuss how several online platforms have started services for buying and selling patents but have failed to gain meaningful traction. And new intermediaries that we call defensive patent aggregators and super-aggregators have become quite influential and controversial in the technology industries they touch. The goal of this paper is to shed light on the role and efficiency tradeoffs of these new patent intermediaries. Finally, we offer a provisional assessment of how the new patent intermediary institutions affect economic welfare.Publication Information and Two-Sided Platform Profits(Elsevier, 2014) Hagiu, Andrei; Halaburda, HannaWe study the effect of different levels of information on two-sided platform profits under monopoly and competition. One side (developers) is always informed about all prices and therefore forms responsive expectations. In contrast, we allow the other side (users) to be uninformed about prices charged to developers and to hold passive expectations. We show that platforms with more market power (monopoly) prefer facing more informed users. In contrast, platforms with less market power (i.e., facing more intense competition) have the opposite preference: they derive higher profits when users are less informed. The main reason is that price information leads user expectations to be more responsive and therefore amplifies the effect of price reductions. Platforms with more market power benefit because higher responsiveness leads to demand increases, which they are able to capture fully. Competing platforms are affected negatively because more information intensifies price competition.Publication Multi-Product Duopoly With Cross-Product Cost Interdependencies(2015-07-22) Biglaiser, Gary; Hagiu, AndreiMany multi-product firms incur a complexity fixed cost when offering different product lines in different quality tiers relative to the case when offering all products lines in the same quality tier (high or low). Such fixed costs create an interdependency between firms’ choices of quality tiers across different product lines, even when demands are independent. We investigate the effects of this interdependency on equilibrium profits in a Stackelberg duopoly game. Both firms’ profits are (weakly) higher when the complexity cost is infinite than when it is 0. The Stackelberg leader’s profits are always (weakly) higher with a positive complexity fixed cost, but its profits can be non-monotonic in the magnitude of this cost. The Stackelberg follower’s profits can be lower when the complexity fixed cost is positive than when it is equal to 0.Publication Multi-Sided Platforms(Elsevier, 2015-05-19) Hagiu, Andrei; Wright, JulianWe study the economic tradeoffs that drive organizations to position themselves closer to or further away from a multi-sided platform (MSP) business model, relative to three traditional alternatives: vertically integrated firms, resellers or input suppliers. These tradeoffs lead to a comprehensive discussion of the defining features of MSPs. The formal model we develop focuses on the MSP versus vertical integration choice, which we interpret in the context of professional services. A key tradeoff emerges between the need to coordinate decisions that generate spillovers across professionals (best achieved by a vertical integrated firm) and the need to both motivate unobservable effort by professionals and ensure professionals adapt their decisions to their private information (best achieved by a MSP). We show how this baseline tradeoff is impacted by the nature of contracts available to the vertically integrated firm and the MSP, and by the possibility of professionals holding pessimistic expectations when deciding whether or not to join the vertically integrated firm or MSP.Publication Enabling Versus Controlling - Online Appendix(2015-07-21) Hagiu, Andrei; Wright, JulianThis online appendix contains the derivation of the closed form solutions for the examples used in the main paper. It also details the numerical analysis performed to check the robustness of the first part of Corollary 1 to the introduction of private benefits and spillovers.Publication Enabling Versus Controlling(2015-07-21) Hagiu, Andrei; Wright, JulianIn an increasing number of industries, firms choose how much control to give professionals over the provision of their services to clients. We study the tradeoffs that arise in choosing between a traditional mode (where the firm takes control of service provision) and a platform mode (where professionals retain control over service provision). The choice of mode is determined by the need to balance two-sided moral hazard problems arising from investments that only professionals can make and investments that only the firm can make, while at the same time minimizing distortions in decisions that either party could make (e.g. promotion and marketing of professionals' services, price setting, choice of service offering, etc.).