Mie la Cour Sonne: "Essays in Two-sided Markets and Optimal Contracting"

"Essays in Two-sided Markets and Optimal Contracting"

This dissertation consists of three chapters, each of which can be read separately. The first two chapters are closely related and contribute to the literature on two-sided markets. Chapter 1 focuses on a monopoly platform and analyzes how vertical mergers affect prices and welfare when markets are two-sided. Contrary to conventional wisdom from one-sided markets, I show that prices can increase as the result of a vertical merger. This can happen both on the side where the merger takes place and on the other side. Furthermore, while firms are better off after a vertical merger, consumers can be worse off.

Chapter 2 presents a model of differentiated platform competition where consumers have the option of purchasing from one or both platforms. Contrary to the results in the existing literature, we find that prices are lower when consumers are multi homing compared to when they are single homing. The last chapter contributes to the literature on contract theory. We analyze the role of conflict in principal-agent environments with subjective performance evaluations, reciprocal agents, and endogenous feelings of entitlements. We find that higher conflict costs can actually increase welfare. Further, we formally characterize situations in which is it optimal for the principal to hire agents who are very sensitive to reciprocity or agents who are likely to have an own opinion. Finally, we show that even if it is costless for the principal to choose a high quality evaluation procedure, he might not find it optimal to do so.