Pricing, Matching, and Bundling: an Equilibrium Analysis of Online Platforms

Abstract

Modern online platforms such as marketplaces, ride-hailing services, and food-delivery systems serve a dual role: they are both markets where participants interact and transact, and operators that design and govern how these markets function. These platforms connect multiple sides, for example buyers, sellers, and couriers, facilitating access that would otherwise be difficult to achieve. By setting the rules of the market, platforms determine who participates, how interactions take place, and how value is created and distributed. In response to these rules, participants may behave strategically, deciding whether to join the platform and which transactions to pursue. This thesis studies how platform design affects market outcomes through three key levers: pricing that determines participants' gains when operating on a platform; matching that governs which interactions are feasible among participants; and bundling that shapes the structure of supply when the platform itself acts as a market participant. Across these levers, the goal in this thesis is to understand how platforms can be designed to balance platform profitability with overall market welfare. The first part of this thesis studies pricing, including both the commission fees that participants pay to a platform and the prices associated with each transaction. For commission fees, I analyze how they affect participants' decisions to join a market platform. For prices on transactions, I examine delivery fees and courier compensation on delivery platforms, showing that well-designed pricing can improve overall market welfare. The second part of this thesis studies matching. By shaping recommendation systems and consumer search, platforms influence which transactions take place. I first demonstrate the computational challenges facing a platform when optimizing for matching decisions, as matching decisions for one participant impose externalities on other participants. Making use of a simulation approach, I then show that matching and pricing interact closely: when commissions fees are regulated, platforms can adjust matching to sustain revenue and support smaller sellers, helping maintain overall market health after an economic crisis. The third part of this thesis analyzes bundling. As a marketplace operator, a platform may be able to source products from sellers and offer them as bundled packages to buyers. I analyze which sets of products a platform will choose to bundle, giving a characterization result about which items are included in bundles made available on the platform. Collectively, this thesis shows how pricing, matching, and bundling serve as complementary design levers through which platforms can shape market outcomes.