The tension between market shares and profit under platform competition

Paul Belleflamme, Martin Peitz, Eric Toulemonde

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Résumé

We introduce asymmetries across platforms in the linear model of competing two-sided platforms with singlehoming on both sides and fully characterize the price equilibrium. We identify market environments in which one platform has a larger market share on both sides while obtaining a lower profit than the other platform. This is compatible with higher price-cost margins on one or both sides, noting that in the latter case one margin must be negative. Our finding raises further doubts on using market shares as a measure of market power in platform markets.

langue originaleAnglais
Numéro d'article102807
journalInternational Journal of Industrial Organization
Volume81
Les DOIs
Etat de la publicationPublié - mars 2022

Financement

We are grateful for useful comments from the Editor Julian Wright and two anonymous reviewers. Paul Belleflamme and Eric Toulemonde gratefully acknowledge financial support by Fédération-Wallonie-Bruxelles through “Action de recherche concertée” (Grant No. 19/24-101). Martin Peitz gratefully acknowledges financial support from Deutsche Forschungsgemeinschaft (DFG) through CRC TR 224 (project B05). ? We are grateful for useful comments from the Editor Julian Wright and two anonymous reviewers. Paul Belleflamme and Eric Toulemonde gratefully acknowledge financial support by F?d?ration-Wallonie-Bruxelles through ?Action de recherche concert?e? (Grant No. 19/24-101). Martin Peitz gratefully acknowledges financial support from Deutsche Forschungsgemeinschaft (DFG) through CRC TR 224 (project B05).

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