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Two duopolists compete in price on the market for a homogeneous product. They can 'profile' consumers, i.e., identify their valuations with some probability. If both firms can profile consumers but with different abilities, then they achieve positive expected profits at equilibrium. This provides a rationale for firms to (partially and unequally) share data about consumers, or for data brokers to sell different customer analytics to competing firms. Consumers prefer that both firms profile exactly the same set of consumers, or that only one firm profiles consumers, as this entails marginal cost pricing (so does a policy requiring list prices to be public). Otherwise, more protective privacy regulations have ambiguous effects on consumer surplus.

We introduce within-group external effects in the two-sided singlehoming model of Armstrong (2006) . First, we propose a general characterization of the platform access fees at the symmetric equilibrium of the game. Second, we combine this general formulation with a specific modeling of the relationship between buyers and sellers on B2C platforms, so as to analyze how changes in the underlying characteristics of the product market affect the equilibrium of the game. We show that sellers may be better off, and buyers worse off, in markets with more sellers. We also show that sellers and buyers prefer full product differentiation while platforms prefer no differentiation.

We start by using various economic and pedagogical concepts to understand the specificities of MOOC (Massive Online Open Courses) platforms. We then discuss how the private provision of MOOCs, seen as pure public goods, can be sustained. Based on the theory of multisided platforms, we analyse five ways to monetize the MOOC business. Our conclusion is that the most sustainable approach is what we call the ‘subcontractor model’, flavored by touches of the other four models. We then claim that MOOC platforms can play a key transformative role in the higher education sector by making teaching practices evolve, rather than by replacing incumbent institutions. Finally, we derive a number of directions for public policy: governments should act to foster the cooperation between MOOC platforms and other higher education institutions, so as to improve the benefits that can arise from these technological innovations; a particular focus should also be given to professors in order to encourage them to innovate in their teaching practices.

Empirical studies suggest that the huge investment in information technologies (IT) of the past two decades has led to no significant increase in productivity; this phenomenon is known as the ‘productivity paradox’. It has been argued that the paradox might result from oligopolistic competition: because of strategic interaction, each individual firm might find it profitable to invest in cost-reducing IT, but total investment might then be excessive from the industry’s point of view. I confirm this view and strengthen it by allowing IT investment to be also devoted to product differentiation which makes the productivity paradox more likely. The emergence of Web-based electronic commerce provides an illustration of the forces identified in the model.

This note summarizes and updates our previous survey of the economics of digital piracy (Belleflamme and Peitz, 2012).

This article reviews some recent developments in the study of crowdfunding -- i.e., the practice of raising funds through an open call on the Internet. It also shows how microeconomic theory can help us understand some important aspects of crowdfunding that go beyond the finance sphere of the firm. A special attention is devoted to the role and behavior of crowdfunding platforms, which intermediate between entrepreneurs and contributors. Throughout the article, the Belgian market for crowdfunding serves as the main source of illustrations.

This article reviews recent theoretical contributions on digital piracy. It starts by elaborating on the reasons for intellectual property protection, by reporting a few facts about copyright protection, and by examining reasons to become a digital pirate. Next, it provides an exploration of the consequences of digital piracy, using a base model and several extensions (with consumer sampling, network effects, and indirect appropriation). A closer look at market-structure implications of end-user piracy is then taken. After a brief review of commercial piracy, additional legal and private responses to end-user piracy are considered. Finally, a quick look at emerging new business models is taken.

This study investigates characteristics of individual crowdfunding practices and drivers of fundraising success, where entrepreneurs can tailor their crowdfunding initiatives better than on standardized platforms. Our data indicate that most of the funds provided are entitled to receive either financial compensations (equity, profit-share arrangement) or non-financial benefi ts (final product, token of appreciation), while donations are less common. Moreover, crowdfunding initiatives that are structured as non-profit organizations tend to be significantly more successful than other organizational forms in achieving their fundraising targets, even after controlling for various project characteristics. This finding is in line with theoretical arguments developed by the contract failure literature that postulates that non-profit organizations may find it easier to attract money for initiatives that are of interest for the general community due to their reduced focus on profits.

Introduction to Part VIII: Networks, standards and systems Information products and technologies are rarely used in isolation or just for their own sake. Take the example of instant messaging (IM) services , whose primary functionality is to allow you to exchange text messages with other users over the Internet in real time. The first IM services (like AOL Instant Messenger, Yahoo! Messenger or Windows Live Messenger) were used on computers and often bundled with a particular web browser. With the advent of smartphones, instant messaging became increasingly mobile and a number of IM applications (like Whatsapp, WeChat, Line, Viber, Kakao Talk, etc.) were made compatible with the major smartphone platforms (Android, iOS, BlackBerry, Windows Phone). Regardless of the supporting technology, adopting a particular IM service involves for users a larger set of considerations than the purchase of, say, a bag of potatoes. In particular, a user of an IM service must care about what other users are doing . The benefits of using the service come, indeed, from two sources: first and foremost, the ability to chat with other users and potentially, the additional features that can be used within the IM application (such as editing pictures, recording down moments of your life, following accounts of celebrities or obtaining discounts from tied-up partners). What is important to stress is that the benefits for an individual user increase with the number of other users of the service : either directly for the communication benefits (a larger base of users directly increases the number of potential contacts any user can have via the IM service), or indirectly for the benefits related to additional features (a larger base of users induces providers to supply more and/or better features to be combined with the IM service, which in turn raises the attractiveness of the service). We use the term network to describe the community of users whose benefits are made interdependent by the nature of the product they use. By analogy, we call goods like IM services network goods.

Introduction to Part IV: Pricing strategies and market segmentation Consider the book you have in your hands and suppose, for now, that this is the only IO textbook on the market, so that we, the authors, are in a monopoly position. To introduce this part, we want to illustrate here how the profit we (or, more correctly, our publisher) can make by selling our book depends on the information we have about our potential consumers, and on the range of instruments we can use to design our tariffs. With limited information and instruments, the best we can do is to set a ‘one-size-fits-all’, uniform price for all our potential consumers. However, more information and instruments allow us to increase our profit. Regarding the information about the consumers, it is not enough to know that consumers differ in their willingness to pay for our book; the crucial issue is to know who is willing to pay what. Armed with such knowledge, we can increase profit by setting different prices to different consumers, a practice generally known as price discrimination , presuming that resale is not possible or sufficiently costly. In some situations, the consumers’ willingness to pay can be directly inferred from some observable characteristics. Ideally, we would like to know exactly how much each potential consumer is willing to pay for the book; we would then make a personalized take-it-or-leave-it offer to each of them by quoting a price just below the consumer's reservation price; we would thereby appropriate the entire consumer surplus. More realistically, we can use market data analysis to segment our market in several groups, with the consumers in each group sharing some common characteristics and correlated willingness to pay. For instance, we can segment the market on a geographical basis and sell the book at different prices, say, in the USA and in Europe if market research reveals that those two markets exhibit different demand functions. In other situations, however, there is no direct way to segment the market based on some observable characteristics. In such cases, we can still increase our profit by using an incentive-compatible mechanism whereby consumers reveal their willingness to pay to us.

Since the economic and managerial fields integrated the Internet tool, new opportunities were created. Among them, information management aiming at helping to make the "best choices" became a central topic in e-management. New types of intermediaries appeared in the virtual world as `interorganizational information systems’. Actors who join these systems and take part in the development of these virtual commercial places play an atypical game: on the one hand, they cooperate in the same virtual entity of reticular form and, on the other hand, they remain individually in competition with one another since they are in a common market with comparable goods and services. How should we address this competitive game? Our paper tries to answer this question by qualifying the collaboration of “coopetition” between platform members and competition between various online platforms. Moreover, in order to avoid any confusion, we propose a distinction between `electronic marketplaces' and `online information platforms'. We apply our general analysis to the case of e-tourism.

R&D cooperation is reconsidered in situations where firms direct R&D activities towards a new product that cannibalizes the firms' existing products. For soft cannibalization, the welfare-maximizing arrangement between firms involves, for low R&D costs, the formation of a separate entity that independently chooses both the output level of the new good and the level of R&D expenditures and otherwise, joint decisions about R&D but independent decisions about production. Yet, as cannibalization increases, firms find it unprofitable to market the new good unless they collaborate more narrowly. Merger should then be permitted for the socially desirable introduction of the new good.

This paper investigates the relation between asymmetries in the distribution of shares in joint ventures and asymmetries between the parent companies. When the joint venture and the parent companies are controlled by separate entities, we provide a simple formula to compute the optimal ownership structure. This formula is applied to various models of market interaction, showing that larger companies should have a larger fraction of shares, and so should companies whose goods are closer substitutes of the product of the joint venture, or companies who have a higher cost of transformation of the input produced by a joint venture.