Professionalization of Online Gaming? Theoretical and Empirical Analysis for a Monopoly-Holding Platform
We analyze the private equilibrium of a two-sided market representing the online gaming industry under a principal-agent model. A monopoly-holding platform hires a manager to attract new members from both sides of the market while considering uncertainty on the adhesion of viewers and online gamers....
| Main Authors: | , |
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| Format: | Article |
| Language: | English |
| Published: |
MDPI AG
2021-01-01
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| Series: | Journal of Theoretical and Applied Electronic Commerce Research |
| Subjects: | |
| Online Access: | https://www.mdpi.com/0718-1876/16/4/40 |
| _version_ | 1797520753857396736 |
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| author | Vitor Miguel Ribeiro Lei Bao |
| author_facet | Vitor Miguel Ribeiro Lei Bao |
| author_sort | Vitor Miguel Ribeiro |
| collection | DOAJ |
| description | We analyze the private equilibrium of a two-sided market representing the online gaming industry under a principal-agent model. A monopoly-holding platform hires a manager to attract new members from both sides of the market while considering uncertainty on the adhesion of viewers and online gamers. First, we mathematically demonstrate that increasing cross-group network externalities can decrease the platform’s profit, which contradicts a canonical result from the field of two-sided markets. Moreover, knowing that the intermediary’s goal is aligned with the private interest of online gamers, machine learning models empirically show that the main theoretical outcome is observed in reality due to the presence of heterogeneous indirect network effects in online gaming activities. Second, we conclude that social welfare can be either harmed or improved for increasing cross-group network externalities, which means that the professionalization of online gaming may or may not be legitimized depending on the value taken by exogenous parameters related to the platform’s uncertainty on the number of agents that get on board, risk aversion of viewers, and royalty rate applied to online gamers. Finally, a discussion based on 2020 facts is provided and several policy recommendations are formulated to ensure the persistence of best regulatory practices. |
| first_indexed | 2024-03-10T08:01:06Z |
| format | Article |
| id | doaj.art-82b002ecf93a4105828d38e9224a0e58 |
| institution | Directory Open Access Journal |
| issn | 0718-1876 |
| language | English |
| last_indexed | 2024-03-10T08:01:06Z |
| publishDate | 2021-01-01 |
| publisher | MDPI AG |
| record_format | Article |
| series | Journal of Theoretical and Applied Electronic Commerce Research |
| spelling | doaj.art-82b002ecf93a4105828d38e9224a0e582023-11-22T11:28:23ZengMDPI AGJournal of Theoretical and Applied Electronic Commerce Research0718-18762021-01-0116468270810.3390/jtaer16040040Professionalization of Online Gaming? Theoretical and Empirical Analysis for a Monopoly-Holding PlatformVitor Miguel Ribeiro0Lei Bao1Economic Sciences and Tourism Research Center of Consuelo Vieira da Costa Foundation, Higher In-stitute of Administration and Management, 4100-442 Porto, PortugalSchool of Economics and Management, Huaiyin Normal University, Huaian 223001, ChinaWe analyze the private equilibrium of a two-sided market representing the online gaming industry under a principal-agent model. A monopoly-holding platform hires a manager to attract new members from both sides of the market while considering uncertainty on the adhesion of viewers and online gamers. First, we mathematically demonstrate that increasing cross-group network externalities can decrease the platform’s profit, which contradicts a canonical result from the field of two-sided markets. Moreover, knowing that the intermediary’s goal is aligned with the private interest of online gamers, machine learning models empirically show that the main theoretical outcome is observed in reality due to the presence of heterogeneous indirect network effects in online gaming activities. Second, we conclude that social welfare can be either harmed or improved for increasing cross-group network externalities, which means that the professionalization of online gaming may or may not be legitimized depending on the value taken by exogenous parameters related to the platform’s uncertainty on the number of agents that get on board, risk aversion of viewers, and royalty rate applied to online gamers. Finally, a discussion based on 2020 facts is provided and several policy recommendations are formulated to ensure the persistence of best regulatory practices.https://www.mdpi.com/0718-1876/16/4/40two-sided marketsmonopolyonline gamingsalesforce compensationmachine learning |
| spellingShingle | Vitor Miguel Ribeiro Lei Bao Professionalization of Online Gaming? Theoretical and Empirical Analysis for a Monopoly-Holding Platform Journal of Theoretical and Applied Electronic Commerce Research two-sided markets monopoly online gaming salesforce compensation machine learning |
| title | Professionalization of Online Gaming? Theoretical and Empirical Analysis for a Monopoly-Holding Platform |
| title_full | Professionalization of Online Gaming? Theoretical and Empirical Analysis for a Monopoly-Holding Platform |
| title_fullStr | Professionalization of Online Gaming? Theoretical and Empirical Analysis for a Monopoly-Holding Platform |
| title_full_unstemmed | Professionalization of Online Gaming? Theoretical and Empirical Analysis for a Monopoly-Holding Platform |
| title_short | Professionalization of Online Gaming? Theoretical and Empirical Analysis for a Monopoly-Holding Platform |
| title_sort | professionalization of online gaming theoretical and empirical analysis for a monopoly holding platform |
| topic | two-sided markets monopoly online gaming salesforce compensation machine learning |
| url | https://www.mdpi.com/0718-1876/16/4/40 |
| work_keys_str_mv | AT vitormiguelribeiro professionalizationofonlinegamingtheoreticalandempiricalanalysisforamonopolyholdingplatform AT leibao professionalizationofonlinegamingtheoreticalandempiricalanalysisforamonopolyholdingplatform |