Gao, Ming

Assistant Professor, Department of Economics
   

Curriculum Vitae



Phone               (86) (10) 62793163
Email              
gaom@sem.tsinghua.edu.cn
Office              556 Weilun Building
Office Hours    

 

Assistant Professor, Department of Economics, School of Economics and Management, Tsinghua University.

Professor Gao received his Ph.D. in Economics from London Business School. He also holds an M.A. in Quantitative Economics (ranked 1st in class) 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.

He teaches one of the core courses of the Tsinghua-MIT Global MBA Programme, Managerial Economics (English), which has been awarded "Tsinghua Fine Course Collection (Post-Gratuate)". He has a MOOC (Massive Open Online Course) on Theory of Industrial Organization (on www.xuetangx.com). He also teaches two regular undergraduate courses, Theory of Industrial Organization (English), and Economics Thesis Writing. He has twice been awarded the "Excellence in Teaching Award" by the School of Economics and Management, Tsinghua University.

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. (See 'Publications' and 'Projects' tabs for details.)

Formerly he worked at Cheung Kong Graduate School of Business.

 

Journal Papers (International)

Ming Gao, “Platform Pricing in Mixed Two-sided Markets”, International Economic Review, 59-3, 2018.
 

Endorsed by National Natural Science Foundation of China, presented in 2015 at 6th Searle Center Annual Conference on Internet Search and Innovation (Northwestern University), 13th Annual International Industrial Organization Conference (IIOC, Boston), 6th Workshop on the Economics of ICTs (University of Évora, Portugal), etc.

When a consumer can appear on both sides of a two-sided market, such as a user who both buys and sells on eBay, the platform may want to bundle the services it provides to two sides. We develop a general model for such "mixed" two-sided markets, and show that a monopolist platform's incentive to bundle and its optimal pricing strategy are determined by simple formulas using familiar price elasticities of demand, which embody the bundling effect, and price-cost margins adjusted for network externalities, which incorporate "two-sidedness". The optimal pricing rule in such markets generalizes the familiar Lerner formula.

Key Words: two-sided market, platform, bundling, price elasticity of demand

JEL Classification: D42, L11, L12.

Ming Gao, Mingzhi Li, "Strategies for Developing China's Software Industry", Journal of Information Technologies and International Development, 2003, 1(1), 61-73, MIT Press


Recent Conference Papers (International)

Ming Gao, “Multi-Seller Membership Pricing”, under review.

  (an online appendix here)

Best Paper Award, China Industrial Economics Research Annual Conference 2015, also presented at 2017 Asian Meeting of the Econometric Society (CUHK), 2017 Royal Economic Society Conference (Bristol, UK), 2016 International Conference on Innovation and Industrial Economics (Nanjing, China), 2016 Workshop on Industrial Organization and Management Strategy (IOMS, HKUST, Hong Kong), 2016 Annual International Industrial Organization Conference (IIOC, Philadelphia), etc.

We study when and how the host organization of multiple sellers, such as a shopping mall, should subsidize or charge customers for access to its sellers if feasible. Each seller provides a different product, sets her own optimal price, and shares profit with the host proportionally to their bargaining power. We show that equilibrium subsidy is a multi-seller phenomenon, because a host with only one seller always charges customers. With multiple sellers, more bargaining power generally gives the host more incentive to subsidize customers, because it will be able to take larger shares of sellers' profit gains from increased demand. A less elastic demand for an individual seller, or a large cross-price elasticity of demand for the host also favors a subsidy versus a fee. Regardless of any demand-side factors, including price elasticities, consumer valuation distributions and cross-seller interdependencies, the host always charges a fee as long as the sum of the profit shares taken from individual sellers does not exceed 1. When this sum of profit shares does exceed a higher threshold, an equilibrium subsidy emerges. Therefore, large host organizations with more sellers and bigger bargaining power are more likely to subsidize customers, whereas small ones tend to charge fees. We also analyze welfare and find determinants of the host's incentive to offer purchase-contingent discounts on its membership fee.

Key Words: membership fee, subsidy, two-part tariff, multiproduct pricing, surplus sharing, bargaining power

JEL Classification: D42, L11, L12, L81.

Ming Gao, Travis Ng, “Non-Price Discrimination by a Prejudiced Platform”, under review.

Presented at 2017 Asian Meeting of the Econometric Society (CUHK), 2017 International Industrial Organization Conference (IIOC, Boston), 2016 International Conference on Innovation and Industrial Economics (Nanjing, China), 2016 9th bi-annual Postal Economics Conference on E-commerce, Digital Economy and Delivery Services (Toulouse School of Economics, France), etc.

Recent lawsuits and anecdotal evidence suggest that some platforms discriminate against certain users through non-price practices, discouraging their participation without directly increasing revenue. We show that a monopolist two-sided platform with a prejudice against certain users - modeled as more costly to serve - chooses to discriminate only if the cost savings from reducing such users' participation outweigh the network benefits they create. Surprisingly, user surpluses may increase under discrimination because the platform often voluntarily lowers price(s) - sometimes on both sides - to attract other users. Therefore, tightening anti-discrimination policies for platforms can increase price and decrease welfare.

Key Words: discrimination; prejudice; regulation; policies on platforms; two-sided market; non-price strategies

JEL Classification: D42, L11, L12

 
Translation Books

"Game Theory in International Economics", by John McMillan, Chinese translation, Peking University Press, 2004 (ISBN 7-301-06710-0/F.0724)   


"Principles of Economics (6th edition)", by Karl E. Case & Ray C. Fair, Chinese translation, Tsinghua University Press, 2003 (ISBN 7-302-06539-X/F.517) (with two other translators) 

  

 

Multi-Seller Membership Pricing” 

An Economic Theory of App Review” (jointly with Travis Ng)

Platform Pricing in Mixed Two-sided Markets”

“Profiting from Consumer Sophistication of Certainty Bias: Business and Policy Implications”, jointly with Jaimie Lien and Jie Zheng, endorsed project of the Tsinghua University Initiative Scientific Research Program

“A Platform Pricing Model for Mixed Two-Sided Markets”, jointly with Glen Weyl, Alexander White and Jie Zheng, endorsed project of the National Natural Science Foundation of China

A Two-Sided-Market Approach to the Design of the Banking System”, jointly with Ping He, endorsed project of the Tsinghua University Initiative Scientific Research Program

“Corporate Governance of State-Owned Enterprises: the Double Agency Problem”, jointly with Ping He and Yao Lu, endorsed project of the National Natural Science Foundation of China

Probabilistic Selling to Certainty-Biased Consumers” (jointly with Qining Yu)

“Free Gift as a Profitable Pricing Strategy”

“Multiproduct Pricing with Network Effects”