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Abstract. 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 [...]

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. Data, as supplemental material, are available at http://dx.doi.org/10.1287/mnsc.2014.2042 Keywords: intermediation; multisided platforms; control rights; marketing History: Received July 9, 2013; accepted July 7, 2014, by Bruno Cassiman, business strategy. Published online in Articles in Advance November 21, 2014., 1. Introduction Retailers such as 7-Eleven, Eastbay, Lowe's, and Zappos act as intermediaries by reselling the products they purchase from suppliers to buyers. Other intermediaries, such as the Alibaba Group, [...]

An economic model measuring the effect of exclusive dealing and entry where buyers are homogenous price competitors is examined. Anticompetitive exclusive deals can still arise in an economy with competition among buyers.

To link to full-text access for this article, visit this link: http://dx.doi.org/10.1016/j.euroecorev.2005.08.004 Byline: Graeme Guthrie (a), John Small (b), Julian Wright (c) Abstract: Regulators across many different jurisdictions and industries have recently adopted the practice of setting access prices based on the current costs of providing the relevant facilities. Though widely regarded as being efficient, the efficiency implications of using current costs instead of historical costs have not been formally analyzed. Our analysis shows that given stochastic costs, forward-looking access prices retard investment and are generally dominated by access prices determined by historical cost whenever investment is desired. Author Affiliation: (a) School of Economics and Finance, P.O. Box 600, Victoria University of Wellington, Wellington, New Zealand (b) University of Auckland, New Zealand (c) National University of Singapore, Singapore Article History: Received 23 June 2004; Accepted 5 August 2005

A new card payment system for similar mindset consumers and merchants in competitive markets is presented. The model focuses on optimal fee payment charges of both customers and merchants.

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 role 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 role, 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. Keywords: central banks, interest rate smoothing, monetary policy., MOST CENTRAL BANKS currently use interest rate targets as their operating objective in the implementation of monetary policy. Central banks in Australia, Canada, Japan, and the U.S. all target an [...]

This paper presents a model of a card payment system to address the pricing and roles that govern such systems. It evaluates the social optimality of privately set interchange fees and the adoption of a rule by payment systems to prevent merchants surcharging for card transactions using two extremes of merchant pricing--monopolistic pricing and perfect competition. Both types of merchant pricing constrain the ability of card schemes to use interchange fees and the no-surcharge role in anticompetitive ways, although for quite different reasons. The positive role of the no-surcharge rule in preventing excessive merchant surcharging is also highlighted. JEL classification: G21; L31; L42 Keywords: Payment systems; Banks; Credit; Debit cards; Interchange fees

A competition model for interconnected networks is analyzed. Simple regulation allows for identical access price assignment.

This paper analyses access pricing when a firm's customers create a bottleneck facility when a call made to a person with cellphone requires access to the firm of the subscriber. Thus, the cellular firms are free to set termination charges for fixed-line calls.

Byline: Michael Carter (1), Julian Wright (1) Keywords: Deregulation; interconnection; networks; telecommunications Abstract: Recent deregulation of telecommunications in the U.S. and elsewhere has highlighted the importance of interconnection in network industries. In this paper, we analyse interconnection in a deregulated network where the participants compete in the final retail market. We consider both the case of a mature industry as well as one where a new entrant challenges the incumbent. In the later case, network externalities allow the incumbent to use the terms of interconnection to maintain its dominant position. Moreover, in either case, competition in the retail market can be undermined by collusion over access prices. We discuss the implications for some of the provisions of the new U.S. Telecommunications Act, specifically mandatory interconnection and reciprocity of tariffs, comparing these to the simple 'bill and keep' rule. Author Affiliation: (1) Department of Economics, University of Canterbury, Private Bag 4800, Christchurch, New Zealand Article History: Registration Date: 15/10/2004

A study has been made of the New Zealand public debt and of whether it should be denominated in domestic or foreign currencies. All net public debt is now in New Zealand dollars. An optimal debt portfolio should not have any nominal domestic debt. The dominance of demand or supply shocks is susceptible to the economic environment at any given time. More study will be needed to see effects of New Zealand's new economic environment on its public debt portfolio., This paper addresses the issue of whether New Zealand's public debt obligations should be denominated in domestic or foreign currency. Using the tax-smoothing approach of Bohn (1990), we estimate optimal [...]

This paper tests the rational expectations theory of the term structure using recent daily, weekly, and monthly observations on New Zealand interest rates. We find that for many maturities we cannot reject the expectations hypothesis using both short and long versions of the theory. These results are interpreted as further evidence that the failure of the expectations hypothesis in the United States is due to the specific interest rate smoothing behaviour of the Federal Reserve., 1. Introduction The rational expectations hypothesis of the term structure is one of the fundamental building blocks of financial and macroeconomic theory. It has important implications for predicting future movements [...]

To authenticate to the full-text of this article, please visit this link: http://dx.doi.org/10.1111/j.1468-0297.2009.02276.x Byline: Mark Armstrong (1), Julian Wright (2) Abstract: We analyse charges levied by mobile telephone networks to deliver calls. We integrate two literatures: one analysing calls from the fixed network, where predicted unregulated termination charges are too high, and one analysing calls from rival mobile networks, where predicted charges are too low. In practice, however, networks adopt uniform charges for terminating both kinds of traffic, as do regulators. We show how incorporating wholesale arbitrage and demand-side substitution helps to reconcile theory with practice. In our framework, the unregulated charge is uniform and typically lies between the efficient and monopoly benchmarks. There remains a rationale for regulation, albeit reduced. Author Affiliation: (1)University College London (2)National University of Singapore