Marianne Verdier

Cooperative and Noncooperative R&D in Two-Sided Markets

In this paper, we analyze the impact of cooperation on R&D investments in a two-sided market, where platforms compete in quantities. We show that if indirect externalities are of a moderate magnitude, the threshold degree of spillovers above which cooperation spurs R&D investments and enhances social welfare increases with the degree of externalities. If indirect externalities are of a strong magnitude, cooperation can also be beneficial in terms of welfare for low degrees of spillovers.

What Drives the Expansion of the Peer-to-Peer Lending?

Peer-to-peer lending platforms are online intermediaries that match lenders with borrowers. We use data from the two leading online lenders, Prosper and Lending Club, to explore main drivers of their expansion in the United States. We exploit the heterogeneity in local lending markets at the county level to analyze three hypotheses for the penetration of online lenders: 1) crisis-related; 2) competition-related; and 3) Internet-related. Our findings support the competition-related hypothesis as online lenders have expanded more in areas with lower density of branch network and lower bank concentration that we interpret as weaker brand loyalty. We also document that spatial, socio-economic and demographic characteristics determine the expansion of online lenders.

One Sided Access in Two-Sided Markets

In this paper, I analyze the incentives of a monopolistic platform to open its infrastructure to an entrant on the buyer side of the market. If buyer and seller demands are linear and identical, and if the entrant operates on a separate market, I show that entry distorts the price structure in favor of sellers. I also show that the entrants profits may increase with the access charge if seller demand is very elastic to prices, because the entrant values the presence of sellers on the platform. If the entrant competes with the platform, its profits may also increase with the access charge if prices are strategic complements and if the degree of product differentiation is sufficiently low.

Interchange Fees and Incentives to Invest in the Quality of a Payment Card System

In this paper, I analyse the optimal interchange fee in a payment card system where two monopoly banks have the possibility to invest in quality to raise the transaction volume. I model quality as a sum of specific investments from the cardholders bank (the Issuer) and the merchants bank (the Acquirer), and I assume that investments impact differently the consumer and the merchant side. If the level of quality is exogenous, I prove that it is optimal for the payment platform to set an interchange fee equal to the Acquirers margin. I extend Baxter (1983)s model by proving that the optimal interchange fee depends on the level of quality of the payment system. However, if banks have the possibility to invest in quality, and if the perception of quality improvements is higher on the consumer side, the optimal interchange fee can be lower than the Acquirers margin. This is because the interchange fee and the Acquirers investments are strategic substitutes. If investments impact relatively more the merchant side, the optimal interchange fee remains equal to the Acquirers margin.

Who Pays for Card Payments? A General Model on the Role of Interchange Fees

When a consumer pays by card, the merchant’s bank pays to the consumer’s bank an interchange fee. In this article, we construct a general model of a card platform that unifies the literature on interchange fees. We enrich the existing frameworks by analyzing the choice of the interchange fee when consumer demand is elastic to retail prices. We show that the difference between the privately set structure of payment card fees and the socially optimal one depends both onbanks’ andmerchants’ pass-throughof their costs to consumers.Weargue that the maturity of the payment card market impacts the redistributive effects of interchange fees (i.e. between consumers and merchants, card and cash users) and therefore, their optimal regulation.

Add-On Services, Bundling and Exclusive Contracts in Platform Markets

In this paper, we study whether a monopolistic platform prefers to impose price parity when it competes with merchants for selling services. The platform and the direct sales channel are differentiated in quality on the consumer side and in terms of efficiency. We show that the platform imposes price parity when it is highly differentiated in quality on the consumer side and that this restriction lowers the total transaction fee paid by consumers and merchants. Price parity increases the total buying price of consumers who buy from merchants who receive high benefits of selling on the platform and decreases it otherwise.