Center for Advanced Management




Prof. Andrei Hagiu (Boston University)

Programm 1

Datum: 3. Juni 2019

Zeit: 13.00 - 14.30 Uhr

Ort: Kaulbachstraße 45, 202

Titel: Controlling vs. Enabling


How does a firm decide whether to employ professionals and control how they deliver services to clients, or to operate as a platform enabling independent professionals to provide services directly to clients? Similarly, how does a manufacturer decide whether to allow sales agents to choose certain costly actions (e.g., kickbacks to clients) or to take control of these actions itself? We answer this question using a principal–agent framework in which both the principal and the agent must be incentivized to carry out investments (or effort) that increase the revenue they jointly create. Our theory explains when the principal should take control over a particular decision (“control”) or should instead allow the agent to make the decision (“enable”). It does so both for the case when there are
multiple such transferable decisions for a single agent, and for the case when there are many agents and one transferable decision for each. We also consider the possibility of cost asymmetries between the principal and the agent, spillovers across agents, and the misclassification of the principal as an employer even though agents are allocated the relevant control rights. Finally, we explain how the “control versus enable” choice and its associated trade-offs differ from the classic “make versus buy” choice.

Programm 2

Datum: 4. Juni 2019

Zeit: 12.00 - 13.30 Uhr

Ort: Professor-Huber-Platz 2, VU104

Titel: Creating platforms by hosting rivals


We explore conditions under which a multiproduct firm can profitably turn itself into a platform by “hosting rivals,” i.e. by inviting rivals to sell products or services on top of its core product. Hosting eliminates the additional shopping costs to consumers of buying a specialist rival’s competing version of the multiproduct firm’s non-core product. On the one hand, this makes it easier for the rival to compete on the non-core product. On the other hand, hosting turns the rival from a pure competitor into a complementor: the value added by its product now helps raise consumer demand for the multi-product firm’s core product. As a result, hosting can be both unilaterally profitable for the multi-product firm and jointly profitable for both firms.

Programm 3

Datum: 5. Juni 2019

Zeit: 13.00 - 14.30 Uhr

Ort: Kaulbachstraße 45, 202

Titel: Platforms and the exploration of new products


A key strategic decision for platforms is the extent to which they should facilitate the entry of untested new products and sellers alongside established products and sellers. Exploration by current buyers helps future buyers better value these products and sellers. This externality across buyers raises the possibility that there may be too little exploration from the platform’s perspective. On the other hand, when sellers have market power and so price strategically, and platforms extract a share of seller revenue (i.e., charge commissions), the direction of any such bias is not obvious. We provide a theory that predicts when the platform will prefer more, less or the same level of
exploration as that induced by sellers in equilibrium. Our theory can explain why platforms will sometimes have no incentive to steer buyers one way or another, or may actually want to steer buyers towards established products and sellers.