Research

Work in Progress

"Platform Price Matching Guarantees: Revival of an Old Instrument?"

Abstract: After the ban of price parity clauses (PPCs) for platforms like Booking.com in several jurisdictions, we can observe that such platforms employ price matching guarantees (PMGs) instead. In a model of a monopoly search platform with seller competition, I show that platform PMGs lead to a free-riding puzzle such that sellers—via the PMG—compete with the price on their direct sales channel and want to set infinite prices on the platform. The reason is that the party setting prices (the sellers) is not the one offering the PMG (the platform), i.e., the one reimbursing consumers for the price difference. I show that in combination with forces that restrict prices on the platform, including the platform directly setting a price cap, a PMG may be profitable to the platform. My findings suggest that compared to PPCs, whether the platform benefits from a PMG is more conditional, the effect on consumer prices is lower but seller profits may be more reduced.

"Price Parity Clauses and Rebates: Is Platform Competition Well-Defined?", with S. Schweighofer-Kodritsch

Abstract: We add to the puzzle observed by Schwartz and Vincent (2020) that under the possibility to offer cash-rebates to buyers, the combination of platform competition and price parity clauses leads to inexistence of an equilibrium in which more than one platform operates. We show that the inexistence result holds under an even more general set of models, including for when we allow for seller competition on the platform as well as sellers competing with the platform by offering a direct sales channel.

"How Hard is Effort? The Value of Reducing Uncertainty in a Moral Hazard Problem"

Abstract: I consider an agency problem where a budget-constrained agent makes an unobserved effort choice on the principal's task. The agent's effort cost is ex-ante uncertain but can be learned through costly information acquisition at an interim stage—after the contract is signed but before the task is performed. The principal can acquire the information herself (centralization) or delegate acquisition to the agent (delegation). I further distinguish between whether the acquired information becomes public knowledge or is privately learned by the acquirer.

Delegation saves the principal information acquisition costs as the agent is payed from his limited liability rent earned in the effort task. This results in a trade-off when information is learned publicly under centralization but privately under delegation as delegation then adds an adverse selection problem—making centralization strictly optimal for low acquisition costs. When the principal learns the information privately, information acquisition becomes completely ineffective and she is better off by delegating to the agent. While efficient effort implementation may be reached under delegation, effort is always distorted under centralization.

"Limited Liability Harming Communication"

Abstract: In a model in which, some time after they agree to a contract,  the principal privately learns information that only affects the agent's utility directly (e.g., the size of the agent's effort cost), I show that limited liability of the agent destroys effective communication and the principal cannot improve compared to the situation with no information. In contrast, in the absence of the limited liability constraint, the first-best solution is achievable by the principal, despite the fact that effective communication limits her to earn the same profit independent of her privately learned information.

The results suggest that policy interventions that prohibit the parties to contract on punishments in the form of transfers made from the agent to the principal may harm welfare at the expense of the principal, without helping the agent.

"Matching with Multi-dimensional Constraints: The German Entry-Level Labor Market for Teachers," with P. Pillath

"Loss Aversion as Explanation for Free Trials in Subscription Markets"

Publications

"Can Land Taxes Foster Sustainable Development? An Assessment of Fiscal, Distributional and Implementation Issues," Land Use Policy, Vol. 78, November 2018, pp. 338-352, with M. Kalkuhl, B. Fernandez Milan, G. Schwerhoff, M. Jakob, and F. Creutzig