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Shopping Cost and Multi-Seller Agglomeration

Alumni and External Relations Office    2019-10-09

Shopping Cost and Multi-Seller Agglomeration

Speaker: Ming Gao, Assistant Professor, Tsinghua University

Host: Professor Zhang Lei

Time: Wednesday, October 16, 2019, 14:30-16:00

Venue: A305, Antai Building

 

Abstract:

We provide a theory of seller agglomeration from the perspective of standard multiproduct pricing. When consumers face a shopping cost (e.g., due to transportation) to access a group of sellers (e.g., those clustering in a downtown shopping area or a mall) who face otherwise independent demands, complementarities are created across all these sellers. As a result, their equilibrium prices tend to be too high from a joint-profit maximization perspective. Complementarities also imply that increasing the number of sellers will generally increase all existing sellers' profits, and thus generates an endogenous positive network externality that naturally gives rise to multi-seller agglomeration. We study conditions under which these intuitive results hold, and investigate their regulatory implications.


Bio

Professor Gao received his Ph.D. in Economics from London Business School. He also holds an M.A. in Quantitative Economics and a B.A. in Economics (with Distinction) from Tsinghua University.His main research area is applied industrial organization theory, including two-sided market theory, platform pricing, multi-product pricing and behavioral IO theories. His recent work is published in International Economic Review. His research projects have been endorsed by the National Natural Science Foundation of China, the State Education Ministry of China, and the Tsinghua University Initiative Scientific Research Program.His current research projects include membership pricing by the host organization of a group of non-collusive sellers (such as a shopping mall); pricing by “mixed” two-sided platforms (such as Uber, Alipay and Taobao.com); welfare analysis of platforms' non-price discriminatory practices (such as app platforms' review policy and media censorship); and how sellers can profit from consumer sophistication of certainty bias and present bias, etc.He won the "2018 Teacher of the Year Award" by the Department of Economics, Tsinghua University. He has twice been awarded the "Excellence in Teaching Award" by the School of Economics and Management, Tsinghua University. Formerly he worked at Cheung Kong Graduate School of Business.