Seminar series App platform model Commission caps and consumer surplus in app marketplaces Add to calendar 2024-03-26 16:00 2024-03-26 17:30 Europe/Rome App platform model Sala Triaria Villa Schifanoia YYYY-MM-DD Print Share: Share on Facebook Share on BlueSky Share on X Share on LinkedIn Send by email Scheduled dates Mar 26 2024 16:00 - 17:30 CET Sala Triaria, Villa Schifanoia Organised by Robert Schuman Centre for Advanced Studies the Robert Schuman Centre Seminar Series Join Özlem Bedre-Defolie as she presentes her co-authored research with Simon Anderson at the Robert Schuman Seminar Series. This research presentation will discuss how authors Özlem Bedre-Defolie and Simon Anderson model an application platform selling devices to consumers and charge commissions over in-app purchases. Apps are complements, differ in their quality and consumers differ in their unit benefit from app quality. App developers decide whether to develop an app (incurring a fixed cost) and then choose their in-app purchase price. Consumers choose to buy a device and then how much to purchase in each app. Bedre-Defolie and Anderson show that the platform's device fees and app commissions result in insufficient consumer engagement and app entry, compared to levels that would optimise total user surplus. Implementing regulations capping commissions or device fees can enhance overall user surplus. Allowing apps to establish their own payment channels effectively mirrors a zero-commission cap. If the platform is hybrid and replaces some high-quality (infra-marginal) apps with its own apps, it sets a lower commission and higher device fee resulting in higher total consumer surplus and higher profits for the remaining apps, whereas replaced apps lose.