Recently, Lv Gaoyan, a professor in the Department of Management Science and Logistics of the School of Management and Economics of BIT, and professors Peng Huang and Yi Xu, collaborators of the University of Maryland, published a research paper entitled " Quality Regulation on Two-Sided platforms: Exclusion, Subsidization, and First-Party Applications " in the Management Science UTD journal.

Managing platform product quality is critical to the success of bilateral platforms. Previous literature only focused on restricting platform access based on quality threshold, but we compared three quality supervision strategies: (1) the platform eliminated access to low-quality suppliers, (2) provided a fixed amount of subsidies to high-quality suppliers, and (3) it developed its own high-quality products in addition to third-party products. Our analysis shows that the widely used elimination strategy is a special case of the subsidy strategy and does not always benefit the platform. In contrast, both subsidy and self-support strategies make platform owners better, with higher profits, higher average quality and larger consumer network, but only subsidy strategy can really improve social welfare. In addition, the trade-off between subsidy strategy and proprietary strategy depends on the development cost of first-party applications and the proportion of high-quality products, but this relationship is not monotonous. Our results show that the platform does not have to sacrifice product quantity for higher product quality. Through the right choice, it can improve both measures at the same time. This study provides specific guidelines to help platform managers make decisions about supervising the quality of flat sleeve products.

Management Science is a top-level journal in the field of management science and operational research. It is a journal with the longest history and the highest reputation. One of the 24 top academic journals of the business school (UTD 24) selected by the University of Texas Dallas is one of the important reference conditions for the ranking, professional title promotion, scientific research projects and talent plan review of the school of the business and management.

Paper details: Peng Huang,Gaoyan Lyu,Yi Xu(2021) Quality Regulation on Two-Sided Platforms: Exclusion, Subsidization, and First-Party Applications. Management Science 0(0).

https://doi.org/10.1287/mnsc.2021.4075

Paper link: https://pubsonline.informs.org/doi/10.1287/mnsc.2021.4075