final final lecture Flashcards
What are platforms
spaces where sellers and buyers can interact and transfer assets/money
how should a platform rank products
how different are the results of these alternatives
Are rankings more valuable to certain kinds of products
Clicks and bookings are highest when products that consumers prefer are displayed in higher positions
through this ranking is not revenue maximizing
Revenue based rankings improve consuemr welfare and profit compared to expedias current ranking model
But decrease consumer welfare by 15-25 % relative to rankings based on consumer utility
While increasing revenues by 13-32%
Two channesl that ranking changes can influence revenue
1) shifting demand to more expensive alternatives
Trade off: lower probability of purchase vs higher revenue per purchase
2) Increasing probability of any purchase
Consumer finds the product(s) they want easier, more likely to buy
The subscription funnel
Broad to small
unregistered users
Registration wall
Registered users
Paywall
Subscribers
Paywals dominate the online content publishing landscape
usually with a freemium design
Maximizing revenue by regulating subscribers
Think of a tradeoff between pure ad based revenue and subscription revenue
Why not paywall everything
high willingness to pay subscribers will subscribe but reduces exposure to new customers
Difficult for consumers to assess how content matches their preference
Why not keep (almost) everything free
Brings many new readers, but high WTP readers have less reason to subscribe
How to best design a paywall?
quantity choice: how many free articles per time period
Breadth: how much content (topics) can unsubscribded view
Temporal differentiation: Full access on specified days? special issues?
Porosity: should referrals from search enginges, social media etc. be exempt
how does changes in paywall design impact content demand and subscriptions
More paywalled content decreases content demand with modest increase in subscriptions
Suggestive that online content providers hsould consider a switch away from ad revenue based models
Large online retailers becoming dominant players in consumer markets
Tradeoff:
reputation for consumer friendliness and lower search costs, vs
increased market power, potential to increase prices
How does amazon adjust prices when its market power increases
Big tech firms becoming dominant players in consumer markets
Evidence that when amazons market power rises (exogenously) that they increase price
That is exactly what economic theory predicts
So its not shocking in any sense but is different from the typical things anti-trust regulators go after big tech for and might provide insight into the future as their dominant positions consolidate further
