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A key issue for the design of online marketplaces is addressing leakage. Buyers may use the marketplace to discover a seller or to obtain certain conveniences, but the seller may then want to take transactions off the marketplace to avoid transaction fees. Assuming buyers are heterogenous in their switching cost or inconvenience cost of purchasing directly, we provide a model in which there is partial leakage in equilibrium. We use the model to analyze the trade-offs associated with different strategies the marketplace can use to attenuate the effects of leakage: investing in transaction benefits, limiting communication, charging referral fees, using price-parity clauses, introducing seller competition on the marketplace, and hiding sellers that try to induce too much leakage. This paper was accepted by Joshua Gans, business strategy. Supplemental Material: The online appendix is available at https://doi.org/10.1287/mnsc.2023.4757. [ABSTRACT FROM AUTHOR]

Introduction Members of dual-smoker couples (in which both partners smoke) are unlikely to try to quit smoking and are likely to relapse if they do make an attempt. The purpose of this study was to investigate the feasibility, tolerability, and preliminary outcomes of dyadic adaptations of financial incentive treatments (FITs) to promote smoking cessation in dual-smoker couples. Aims and Methods We enrolled 95 dual-smoker couples (N = 190) in a three-arm feasibility RCT comparing two partner-involved FITs (single vs. dual incentives) against a no-treatment control condition. Participants in all conditions were offered nicotine replacement and psychoeducation. A 3-month follow-up provided information about retention, tolerability (ie, self-reported benefits and costs of the study), and preliminary efficacy (ie, program completion, quit attempts, point-prevalent abstinence, and joint quitting). Results Results suggest dyadic adaptations were feasible to implement (89% retention rate) and highly tolerable for participants (p <.001). Neither feasibility nor tolerability varied across the treatment arm. Preliminary efficacy outcomes indicated partner-involved FITs have promise for increasing smoking cessation in dual-smoker couples (OR = 2.36–13.06). Conclusions Dyadic implementations of FITs are feasible to implement and tolerable to participants. Implications The evidence that dyadic adaptations of FITs were feasible and tolerable, and the positive preliminary efficacy outcomes suggest that adequately powered RCTs formally evaluating the efficacy of dyadic adaptations of FITs for dual-smoker couples are warranted. [ABSTRACT FROM AUTHOR]

We model dynamic competition between firms which improve their products through learning from customer data, either by pooling different customers' data (across‐user learning) or by learning from repeated usage of the same customers (within‐user learning). We show how a firm's competitive advantage is affected by the shape of firms' learning functions, asymmetries between their learning functions, the extent of data accumulation, and customer beliefs. We also explore how public policies toward data sharing, user privacy, and killer data acquisitions affect competitive dynamics and efficiency. Finally, we show conditions under which a consumer coordination problem arises endogenously from data‐enabled learning. [ABSTRACT FROM AUTHOR]

Featured Application: Creation of statistically significant reference sample sets for validation, optimization, and demonstration of non-destructive testing techniques, particularly for the additive manufacturing sector. Techniques for the controlled seeding and growth of cracks are urgently required for non-destructive testing technique evaluation, particularly for additive manufactured (AM) samples. This paper describes a method that uses a combination of the tensile load and the resonance excitation of notched AM samples, with in situ monitoring of the resonance frequency serving to track the crack dimensions. Mechanical low-cycle fatigue cracks, ranging in length from ~0.3 mm to ~5 mm, were successfully created in five AM samples using this technique. The samples were non-destructively characterized using optical microscopy and Nonlinear Resonance (NLR) testing. The exploitation of resonance enabled the concentration of a significant number of stress cycles on the samples in much shorter timespans than conventional fatigue testing, enabling a high throughput while utilizing compact components. Furthermore, the tracking of the resonance frequency shift throughout the process enabled non-invasive and no-contact real-time condition monitoring. [ABSTRACT FROM AUTHOR]

Introduction: Australia has a doctor shortage in rural settings, and rural placements for medical students have an important role in increasing the likelihood of students staying in rural settings throughout their careers. However, to date there is limited research regarding medical student perceptions of rural placement quality. Objective: We aimed to determine factors that impact the overall medical student experience during rural placements. Design: Cross‐sectional survey. Setting: Rural/remote clinical schools across Australia. Participants: Medical students on rural/remote clinical placements for at least 6 months. Main outcome measures: To assess factors impacting student experience on rural placements, we conducted a cross‐sectional survey, known as the Australian Rural Clinical School Support Survey (ARCSSS) which was completed online by medical students across Australia. Demographic data were collected in addition to responses regarding academic teaching, extracurricular activities, and support services. Multiple choice and Likert scale questions were utilised. Results: A total of 107 responses to our survey were analysed. The majority of participants were female (66.4%), and in their middle years of clinical education (55.1%). Overall, respondents showed high levels of satisfaction with clinical school supervisors, and clinical education. A high proportion of respondents indicated minimal accessibility of health and other support services. While a large proportion of participants indicated satisfaction with the rural placements, it was demonstrated that students were generally dissatisfied with school wellness activities and extracurricular activities. Financial insecurity was noted. Conclusion: The findings from our survey indicate there are numerous areas in which rural placements have been effective for medical students, and others in which improvement is needed. Furthermore, more research is required to better develop well‐being initiatives that are effective in improving overall experience. [ABSTRACT FROM AUTHOR]

Platforms use price parity clauses to prevent sellers setting lower prices when selling through other channels. They claim these restraints are needed so platforms have incentives to invest in providing search services—without them, consumers would search on the platform but then switch to buy in a cheaper channel. In a model incorporating these effects, we find that wide price parity clauses lead to excessive platform investment while narrow (or no) price parity clauses lead to insufficient platform investment. Taking these investment effects into account, wide price parity clauses lower consumer surplus but have ambiguous effects on total welfare. [ABSTRACT FROM AUTHOR]

Background: Instructors often use a point-based system for grading students (e.g., 100 or 1000 total points). This system can impact student outcomes. Objective: The purpose of this research was to examine the implications of different point value courses for student emotions, perceptions of courses, and classroom performance. Method: The lab-based study used an experimental design to gather student responses to a hypothetical course with one of three potential total point values (100, 1,000, or 100,000 points). The classroom-based study examined student responses to different point values in 12 actual courses in which students were enrolled (with either 100 or 1000 total points). Results: In the lab-based study, courses with greater total point values (i.e., 1000 and 100,000) had greater emotional impact than a course with 100 total points. Participants in these conditions also preferred a course that featured a pass/fail scheme. In the classroom-based study, students in the 100-point condition (vs. 1000-point condition) missed more assignments, and as a consequence, performed more poorly in their course. Conclusion: Higher total point values in courses may have a more significant impact on students' emotions, and as a consequence, they may miss less work, and perform better in the course overall. [ABSTRACT FROM AUTHOR]

Objective: To examine associations between extended medical graduates' rural clinical school (RCS) experience and geographic origins with practising in rural communities five and eight years after graduation. Design, participants: Cohort study of 2011 domestic medical graduates from ten Australian medical schools with rural clinical or regional medical schools. Main outcome measures: Practice location types eight years after graduation (2019/2020) as recorded by the Australian Health Practitioner Regulation Agency, classified as rural or metropolitan according to the 2015 Modified Monash Model; changes in practice location type between postgraduate years 5 (2016/2017) and 8 (2019/2020). Results: Data were available for 1321 graduates from ten universities; 696 were women (52.7%), 259 had rural backgrounds (19.6%), and 413 had extended RCS experience (31.3%). Eight years after graduation, rural origin graduates with extended RCS experience were more likely than metropolitan origin graduates without this experience to practise in regional (relative risk [RR], 3.6; 95% CI, 1.8–7.1) or rural communities (RR, 4.8; 95% CI, 3.1–7.5). Concordance of location type five and eight years after graduation was 92.6% for metropolitan practice (84 of 1136 graduates had moved to regional/rural practice, 7.4%), 26% for regional practice (56 of 95 had moved to metropolitan practice, 59%), and 73% for rural practice (20 of 100 had moved to metropolitan practice, 20%). Metropolitan origin graduates with extended RCS experience were more likely than those without it to remain in rural practice (RR, 2.0; 95% CI, 1.3–2.9) or to move to rural practice (RR, 1.9; 95% CI, 1.2–3.1). Conclusion: The distribution of graduates by practice location type was similar five and eight years after graduation. Recruitment to and retention in rural practice were higher among graduates with extended RCS experience. Our findings reinforce the importance of longitudinal rural and regional training pathways, and the role of RCSs, regional training hubs, and the rural generalist training program in coordinating these initiatives. [ABSTRACT FROM AUTHOR]

A growing number of digital platforms operate in a dual mode: running marketplaces for third‐party products, while selling their own products on those marketplaces. We build a model to explore the implications of this controversial practice. We analyze the tradeoffs that arise from a regulatory ban on the dual mode, showing how such a ban can harm consumer surplus and welfare even when the platform would otherwise engage in product imitation and self‐preferencing. In the empirically most relevant scenarios, policies that prevent platform imitation and self‐preferencing generate better outcomes than an outright ban on the dual mode. [ABSTRACT FROM AUTHOR]

We explore conditions under which a multiproduct firm can profitably turn itself into a platform by "hosting rivals," that is, by inviting rivals to sell products or services on top of its core product. Hosting eliminates the additional shopping costs to consumers of buying a specialist rival's competing version of the multiproduct firm's noncore product. On the one hand, this makes it easier for the rival to compete on the noncore product. On the other hand, hosting turns the rival from a pure competitor into a complementor: the value added by its product now helps raise consumer demand for the multiproduct firm's core product. As a result, hosting can be both unilaterally profitable for the multiproduct firm and jointly profitable for both firms. This paper was accepted by Joshua Gans, business strategy. [ABSTRACT FROM AUTHOR]

Objective: The project aims to build a framework for conducting clinical trials for long‐term interplanetary missions to contribute to innovation in clinical trials on Earth, especially around patient involvement and ownership. Methods: We conducted two workshops in which participants were immersed in the speculative scenario of an interplanetary mission in which health problems emerged that required medical trials to resolve. The workshops used virtual reality and live simulation to mimic a zero‐gravity environment and visual perception shifts and were followed by group discussion. Results: Some key aspects for the framework that emerged from the workshops included: (a) approaches to be inclusive in the management of the trial, (b) approaches to be inclusive in designing the research project (patient preference trials, n‐of‐1 trials, designing clinical trials to be part of a future prospective meta‐analysis, etc), (c) balancing the research needs and the community needs (eg, allocation of the participants based on both research and community need), (d) ethics and partnerships (ethics and consent issues and how they relate to partnerships and relationships). Conclusion: In identifying some key areas that need to be incorporated in future planning of clinical trials for interplanetary missions, we also identified areas that are relevant to engaging patients in clinical trials on Earth. We will suggest using the same methodology to facilitate more in‐depth discussions on specific aspects of clinical trials in aerospace medicine. The methodology can be more widely used in other areas to open new inclusive conversations around innovating research methodology. [ABSTRACT FROM AUTHOR]

A key strategic decision for platforms is the extent to which they should facilitate the entry of untested new products and sellers alongside established products and sellers. Exploration by current buyers helps future buyers better value these products and sellers. This externality across buyers raises the possibility that there may be too little exploration from the platform's perspective. On the other hand, when sellers have market power and so price strategically, and platforms extract a share of seller revenue (i.e., charge commissions), the direction of any such bias is not obvious. We provide a theory that predicts when the platform will prefer more, less, or the same level of exploration as that induced by sellers in equilibrium. Our theory can explain why platforms will sometimes have no incentive to steer buyers one way or another, or may actually want to steer buyers toward established products and sellers. This paper was accepted by Joshua Gans, business strategy. [ABSTRACT FROM AUTHOR]

We analyze the effects of the adoption of real‐time pricing (RTP) of electricity when generating firms have market power. We find that an increase in consumers on RTP contracts decreases peak prices and increases off‐peak prices, increases consumer surplus (both for switching and non‐switching consumers) and welfare, while decreasing industry profits, with these effects being magnified by the extent of market power. We illustrate these results by calibrating our model to the New Zealand electricity market, and find that taking into account the market power of generating firms increases the efficiency gains from RTP adoption by 41%. [ABSTRACT FROM AUTHOR]

We provide a model in which consumers search for firms directly or through platforms. Platforms lower search costs but charge firms for the transactions they facilitate. Platform fees raise the possibility of showrooming, in which consumers search on a platform but then switch and buy directly to take advantage of lower direct prices. In settings like this, search platforms like Booking.com have adopted price parity clauses, requiring firms to offer their best prices on the platform, arguing this is needed to prevent showrooming. However, despite allowing for showrooming in our model, we find that price parity clauses often harm consumers. [ABSTRACT FROM AUTHOR]

We provide a new theory of ad valorem contracts (i.e., contracts that vary with the value of the transaction), which can explain why such contracts are widely used between vertically related parties (e.g., in franchising and licensing). Ad valorem contracts allow upstream firms (principals) to preserve their own incentives to make ongoing investments in the channel and deal with pricing distortions caused by channel coordination problems, while at the same time adjusting their investment on the basis of demand shocks that are only observed by the downstream firms (agents). We show that the optimal ad valorem contract allows the principal to achieve the same profits as if it could observe the demand shocks and control price. This optimal contract makes use of revenue sharing (to balance investment incentives and make the principal's investment responsive to demand through price), upfront fixed fees (to extract the agents' expected profit), and an additional term that depends nonlinearly on either price or demand (to correct for remaining pricing distortions). Our results are robust to the introduction of competition between agents, production costs, and imperfect monitoring of the agents' prices. This paper was accepted by Eric Anderson, marketing. [ABSTRACT FROM AUTHOR]

Most central banks currently implement monetary policy by targeting a short-term interest rate. This paper asks: "What is the optimal form for such interest rate targeting, given the objectives facing central banks?" We find the optimal rule is for the central bank to change the target rate whenever the deviation between its preferred rate and the current target rate reaches some critical level, and in this case the target rate is changed by a discrete amount in the direction of its preferred rate. Despite the simplicity of this rule, we are able to replicate a number of puzzling features of interest rate targeting observed in practice, as well as explain some dynamic properties of market interest rates. [ABSTRACT FROM AUTHOR]

We consider whether workers who provide their services through online platforms, such as Handy and Uber, should be classified as independent contractors or employees. Using a formal economic model, we show how being too strict or too liberal in classifying workers as independent contractors (relative to the actual degree of control workers have) can be detrimental, not just to firms and welfare, but sometimes to the workers themselves. We also use the model to explore the extent to which an intermediate classification of workers between employees and independent contractors may lead to better outcomes. The intermediate classification is meant to apply to firms that retain control of some actions while their workers control others, as is the case for many online platforms. [ABSTRACT FROM AUTHOR]

How does a firm decide whether to employ professionals and control how they deliver services to clients, or to operate as a platform enabling independent professionals to provide services directly to clients? Similarly, how does a manufacturer decide whether to allow sales agents to choose certain costly actions (e.g., kickbacks to clients) or to take control of these actions itself? We answer this question using a principal–agent framework in which both the principal and the agent must be incentivized to carry out investments (or effort) that increase the revenue they jointly create. Our theory explains when the principal should take control over a particular decision ("control") or should instead allow the agent to make the decision ("enable"). It does so both for the case when there are multiple such transferable decisions for a single agent, and for the case when there are many agents and one transferable decision for each. We also consider the possibility of cost asymmetries between the principal and the agent, spillovers across agents, and the misclassification of the principal as an employer even though agents are allocated the relevant control rights. Finally, we explain how the "control versus enable" choice and its associated trade-offs differ from the classic "make versus buy" choice. The online appendix is available at https://doi.org/10.1287/mnsc.2017.2956. This paper was accepted by Joshua Gans, business strategy. [ABSTRACT FROM AUTHOR]

Discussions regarding overweight may be infrequent in Australian general practice. General practitioners (GPs) may find these discussions difficult to initiate if they are unsure of the language to use, or if patients would find it acceptable to be weighed. Overweight and obesity are more prevalent in rural areas than in metropolitan areas, and strategies to address the health risks associated with these conditions need to be tailored to rural communities. The aims of this study were to identify the language preferred by an Australian adult sample with a range of body sizes, to assess acceptability of routine weight measurement by GPs, and to assess potential influence of gender, body size and rurality on these preferences. A questionnaire was distributed through the authors' informal networks using email and social media. Australian adults were eligible to participate. Respondents (n = 771) were predominantly female, health professionals and resided in rural areas. The preferred language was weight neutral (' weight ') or linked to health (' your weight may be damaging your health ', ' you are above your healthy weight range '). Preferred language appeared to be influenced by gender and body size but not rurality. Most respondents (76%) would find it acceptable to be weighed regularly by their GP. [ABSTRACT FROM AUTHOR]

Many platforms that facilitate transactions between buyers and sellers charge ad valorem fees in which fees depend on the transaction price set by sellers. Given these platforms do not incur significant costs that vary with transaction prices, their use of ad valorem fees has been questioned. In this paper, using a model that connects ad valorem fees to third‐degree price discrimination, we evaluate the welfare consequences of banning such fees. We find the use of ad valorem fees generally increases welfare, including for calibrated versions of the model based on data from Amazon's marketplace and Visa's signature debit cards. [ABSTRACT FROM AUTHOR]

For many applications of signalling, senders rather than nature choose unobserved features such as their private choices of quality, capacity, investment, contract, or price, along with other actions that are (partially) observed by receivers. Despite the large number of different applications, these games have not been studied in any systematic way. We identify and study a general class of such games, which we call "endogenous signalling games". These games normally suffer from a plethora of equilibria. To focus on reasonable equilibria, we propose to solve such games by requiring that the solution be invariant to a particular reordering of the senders' moves. For a class of single-sender monotone endogenous signalling games, we show that the sender's private choice can still have some commitment value even though it is not observed and that the sender's signals must be exaggerated in equilibrium. Applications to loss-leader pricing, costly announcements, limit pricing, advertising, corporate financing, and private contracting are given. [ABSTRACT FROM AUTHOR]

Background and objectives Regional Australia remains a district of workforce shortage for nephrology. Thus, it is imperative that patients who have the greatest need for nephrologist services are effectively identified upon referral. The aim of this study was to assess referrals to a regional nephrology service against Australian guidelines by assessing the patient's renal function and the information contained in the referral document at the time of first consultation. Method We conducted a retrospective study of all referrals to a regional Australian nephrology service between 2013 and 2015. The 582 referrals that met the inclusion criteria were compared with Australian nephrology referral guidelines. Results Less than half of the referral documents (n = 253; 43.5%) described a clinical situation that met referral guidelines, typically due to insufficient pathology investigation. However, after consideration of renal functional test results performed at the initial consultation, an additional 82 cases met referral guidelines (n = 335; 57.6%). Discussion More than 40% of nephrology referrals to a regional Australian service did not meet Australian nephrology referral guidelines. This has implications for a regional nephrology service that is experiencing workforce pressures, in addition to the health system more broadly, and for patients. Many referrals contained insufficient information to allow differentiation of patients who would benefit most from nephrology care from patients who could be appropriately managed within primary care. [ABSTRACT FROM AUTHOR]

Background: Cardiac abnormalities are frequent in patients with atherosclerotic renovascular disease (ARVD). The Angioplasty and Stenting for Renal Artery Lesions (ASTRAL) trial studied the effect of percutaneous renal revascularization combined with medical therapy compared with medical therapy alone in 806 patients with ARVD. Methods: This was a pre-specified sub-study of ASTRAL (clinical trials registration, current controlled trials number: ISRCTN59586944), designed to consider the effect of percutaneous renal artery angioplasty and stenting on change in cardiac structure and function, measured using cardiac magnetic resonance (CMR) imaging. Fifty-one patients were recruited from six selected ASTRAL centres. Forty-four completed the study (medical therapy n = 21; revascularization n = 23). Full analysis of CMR was possible in 40 patients (18 medical therapy and 22 revascularization). CMR measurements of left and right ventricular end systolic (LV and RVESV) and diastolic volume (LV and RVEDV), ejection fraction (LVEF) and mass (LVM) were made shortly after recruitment and before revascularization in the interventional group, and again after 12 months. Reporting was performed by CMR analysts blinded to randomization arm. Results: Groups were well matched for mean age (70 versus 72 years), blood pressure (148/71 versus 143/74 mmHg), degree of renal artery stenosis (75 versus 75%) and comorbid conditions. In both randomized groups, improvements in cardiac structural parameters were seen at 12 months, but there were no significant differences between treatment groups. Median left ventricular changes between baseline and 12 months (medical versus revascularization) were LVEDV −1.9 versus −5.8 mL, P = 0.4; LVESV −2.1 versus 0.3 mL, P = 0.7; LVM −5.4 versus −6.3 g, P = 0.8; and LVEF −1.5 versus −0.8%, P = 0.7. Multivariate regression also found that randomized treatment assignment was not associated with degree of change in any of the CMR measurements. Conclusions: In this sub-study of the ASTRAL trial, renal revascularization did not offer additional benefit to cardiac structure or function in unselected patients with ARVD. [ABSTRACT FROM AUTHOR]

This article explains why platforms such as Amazon and Visa rely predominantly on ad valorem fees, fees which increase proportionally with transaction prices. It also provides a new explanation for why ad valorem sales taxes are more desirable than specific taxes. The theory rests on the ability of ad valorem fees and taxes to achieve efficient price discrimination, given that the value of a transaction to buyers tends to vary proportionally with the cost of the good traded. [ABSTRACT FROM AUTHOR]

Context:Longitudinal integrated clerkships (LIC) are widely used as an educational method, particularly in rural areas. They are good for facilitating hands-on learning and deep relationships between student, patients, and supervisors. Objectives:This study sought to examine and compare learning experience of third-year rural medical students studying specialties (women’s health, aged care, child and adolescent heath, mental health, general practice) by either a traditional hospital-based rotation or a LIC in a rural general practice setting. Methods:Data was collected from two groups of rural students (LIC; traditional hospital-based) over two academic years, utilizing focus groups to investigate general experiences of living and learning rurally, within the different educational models. Results:Results reaffirmed that there was no perceived academic disadvantage to studying medicine rurally. Studying medicine in a rural area provides increased access to patients, more hands-on experience, and close relationships with patients and colleagues. LIC students reported increased confidence in clinical skills, felt better prepared for internship, however experienced more social isolation than students in hospital-based rotations. Conclusions:Students undergoing a rural LIC feel more confident in their clinical skills and preparedness for practice than other rural students. This study supports the use of LICs as a powerful educational tool. [ABSTRACT FROM PUBLISHER]

We consider the implications of platform price discrimination in the context of card platforms. Despite the platform's ability to price discriminate, we show that it will set fees for card usage that are too low, resulting in excessive usage of cards. We show this bias remains even if card fees (or rewards) can be conditioned on each type of retailer that the cardholder transacts with. We use our model to consider the European Commission's objection to the rules card platforms have used to sustain differential interchange fees across European countries. [ABSTRACT FROM AUTHOR]

Food is a powerful motivator in human functioning—it serves a biological need, as emotional support, and as a cultural symbol. Until recently, the term “comfort food” has been inadequately and unscientifically defined. In addition, the popular media have oversimplified the concept of comfort food as purely unhealthy food, often consumed in moments of stress or sadness. Recent empirical research, detailed within this article, seeks to correct these misrepresentations by describing how comfort food serves as a social surrogate and as a cognitive/emotional representation of others. We discuss these findings with potential course-specific content examples. We also discuss broader teaching implications, highlighting the applicability of comfort food research to virtually every area psychology. [ABSTRACT FROM AUTHOR]

Chronic ill health has recently emerged as the most important health issue on a global scale. Rural communities are disproportionally affected by chronic ill health. Many health systems are centred on the management of acute conditions and are often poorly equipped to deal with chronic ill health. Cardiovascular disease (CVD) is one of the most prominent chronic ill health conditions and the principal cause of mortality worldwide. In this paper, CVD is used as an example to demonstrate the disparity between rural and urban experience of chronic ill health, access to medical care and clinical outcomes. Advances have been made to address chronic ill health through improving self-management strategies, health literacy and access to medical services. However, given the higher incidence of chronic health conditions and poorer clinical outcomes in rural communities, it is imperative that integrated health care emphasises greater collaboration between services. It is also vital that rural GPs are better supported to work with their patients, and that they use consumer-directed approaches to empower patients to direct and coordinate their own care. [ABSTRACT FROM AUTHOR]

Weyl (2010) shows that in multi-sided platform settings, profit maximization leads to classical and Spence distortions, with the Spence distortion providing a new explanation for why prices may sometimes be too high (or too low) on platforms. However, the key formulas that Weyl gives comparing privately and socially optimal prices are misstated. Properly interpreted, his results only explain marginal incentives with respect to setting prices but not the total distortion in prices, which can be very different. (JEL D42, D85, L12, L14) [ABSTRACT FROM AUTHOR]

Suppose an intermediary provides a benefit to buyers when they purchase from sellers using the intermediary's technology. We develop a model to show that the intermediary would want to restrict sellers from charging buyers more for transactions it intermediates. With this restriction an intermediary can profitably raise demand for its services by eliminating any extra price buyers face for purchasing through the intermediary. We show that this leads to inflated retail prices, excessive adoption of the intermediaries' services, overinvestment in benefits to buyers, and a reduction in consumer surplus and sometimes welfare. Competition among intermediaries intensifies these problems by increasing the magnitude of their effects and broadening the circumstances in which they arise. We discuss applications to payment card systems, travel reservation systems, rebate services, and various other intermediaries. [ABSTRACT FROM AUTHOR]

Intermediaries can choose between functioning as a marketplace (in which suppliers sell their products directly to buyers) or as a reseller (by purchasing products from suppliers and selling them to buyers). We model this as a decision between whether control rights over a noncontractible decision variable (the choice of some marketing activity) are better held by suppliers (the marketplace mode) or by the intermediary (the reseller mode). Whether the marketplace or the reseller mode is preferred depends on whether independent suppliers or the intermediary have more important information relevant to the optimal tailoring of marketing activities for each specific product. We show that this trade-off is shifted toward the reseller mode when marketing activities create spillovers across products and when network effects lead to unfavorable expectations about supplier participation. If the reseller has a variable cost advantage (respectively, disadvantage) relative to the marketplace, then the trade-off is shifted toward the marketplace for long-tail (respectively, short-tail) products. We thus provide a theory of which products an intermediary should offer in each mode. We also provide some empirical evidence that supports our main results. [ABSTRACT FROM AUTHOR]