We study the competition between experts and individual bidders in an open auction. The expert, who has superior information, focuses on the common value because his goal is resale. However, the individual bidder, who only knows the private taste, is concerned about both the common and private. We use a theoretical model to show that the participation of experts may (i) reduce an individual bidder's willingness to bid due to the winner's curse, and (ii) increase the individual bidder's willingness to bid due to the revelation of common value (which we refer to as the winner's blessing). The winner's blessing vanishes when the number of individual bidders is large. In addition to the bidding strategies, we discuss how the number of experts affects the auction revenues. We then examine the Chinese government used car auctions from 2015 to 2019 to verify our theoretical predictions. The empirical results suggest that the presence of experts decreases individuals' final bids and the auction revenues.

We build a model of a three-stage game to analyze the quality competition among free (zero-pricing) digital platforms. In the first stage, platforms invest in the quality of their basic services. In the second stage, observing the quality levels of the platforms, users make participation decisions. In the last stage, users choose their tipping amounts, and the platforms use a fraction of the tips to provide club goods and lotteries with a fixed prize. We explore users' tipping and participation strategies and derive conditions under which the equilibrium quality level is insufficient, optimal, or excessive, relative to the socially optimal quality level. We also analyze other revenue-generating mechanisms. We show that if platforms adopt an all-pay auction mechanism, the equilibrium quality level is always insufficient. If platforms use an advertisement mechanism, the equilibrium quality level is insufficient when the marginal revenue from an additional user is low. Policy implications are also discussed.

This paper explores the effects of sub-licensing contracts and exclusive contracts in boosting total investments in public goods (e.g., fighting music piracy) and increasing the payment to an upstream firm (e.g., content providers). Using a general demand system, we show that the free-riding issue makes the total investment level insufficient compared to the market optimal level.

We argue that downstream firms (e.g., streaming platforms) can use revenue-sharing sub-licensing contracts to boost investment. We show that with prices fixed, revenue sharing is irrelevant to the total investment level. However, revenue sharing induces higher prices and will then boost the total investment level through the price channel. We also show that the content provider will give up non-exclusivity if sub-licensing or exclusive contracts can result in higher total market profits. We adopt a specific demand system to verify that firms will price higher and invest more by switching to sub-licensing or exclusive contracts. Under certain conditions of market dominance, the content provider has indeed an incentive to require a revenue-sharing contract or an exclusive contract.