Competition in Two-Sided Markets ¤
TL;DR: In this article, the authors survey recent theoretical work on two-sided markets and the main questions are (i) what determines which side of the market is subsidized (if either) in order to attract the other side, and (ii) is the resulting outcome socially e¢cient?
read more
Abstract: There are many examples of markets involving two groups of participants who need to interact via intermediaries. Moreover, these intermediaries usually have to compete for business from both groups. Examples include academic publishing (where journals facilitate the interaction between authors and readers), advertising in media markets (where newspapers or TV channels enable adverts from producers to reach consumers), payment systems (where credit cards can be a convenient method of transaction between consumers and retailers), and telecommunications networks (where networks are used to provide links between callers and those who receive calls). The paper surveys recent theoretical work on these two-sided markets. The main questions are (i) what determines which side of the market is subsidized (if either) in order to attract the other side, and (ii) is the resulting outcome socially e¢cient?
read more
Chat with Paper
AI Agents for this Paper
Find similar papers on Google Scholar, PubMed and Arxiv
Write a critical review of this paper
Analyze citations of this paper to find unaddressed research gaps
Citations
Quantity vs. Quality and Exclusion by Two-Sided Platforms
TL;DR: A simple model of two-sided platforms, in which one side (W) values not just the quantity of users on the other side (M), but also their average quality in some dimension, which indicates that platforms might find it profitable to exclude low-quality users on side M, even though some would be willing to pay the platform access prices.
61
Platform competition with endogenous homing
TL;DR: In this article, the authors develop a model for two-sided markets with consumers and producers, who interact through a platform and consider competition between two platforms that allow consumers and rms to optimize with respect to how they home, i.e., they allow both individual consumers and individual producers to multi-home or single-home depending on whether it is optimal based on their type and the pricing policies of the two platforms.
Advertising or Freemium: The Impacts of Social Effects and Service Quality on Competing Platforms
TL;DR: The impacts of social effects and service quality on business model decisions through a game-theoretic model is addressed and it is found that the advertising (freemium) strategy is dominant for each platform when its premium service quality is too low (high).
61
Search Diversion and Platform Competition
Andrei Hagiu,Bruno Jullien +1 more
TL;DR: In this article, the authors show that when platforms charge consumers fixed access fees, all equilibrium levels of search diversion under platform competition are equal to the monopoly level, irrespective of the nature of competition.
61
The Advertising-Financed Business Model in Two-Sided Media Markets
Simon P. Anderson,Bruno Jullien +1 more
TL;DR: In this paper, the authors focus on the economic mechanisms at work in recent models of advertising finance in media markets developed around the concept of two-sided markets and highlight new and original insights from this approach, and to clarify the conceptual aspects.
References
Platform competition in two‐sided markets
Jean-Charles Rochet,Jean Tirole +1 more
TL;DR: In this paper, the authors build a model of platform competition with two-sided markets and reveal the determinants of price allocation and end-user surplus for different governance structures (profit-maximizing platforms and not-for-profit joint undertakings), and compare the outcomes with those under an integrated monopolist and a Ramsey planner.
Two-sided markets: a progress report
Jean-Charles Rochet,Jean Tirole +1 more
TL;DR: In this paper, the authors provide a road map to the burgeoning literature on two-sided markets and present new results on the mix of membership and usage charges when price setting or bargaining determine payments between end-users.
Chicken and egg: competition among intermediation service providers
Bernard Caillaud,Bruno Jullien +1 more
TL;DR: In this paper, the authors analyze a model of imperfect price competition between intermediation service providers, and analyze in detail the pricing and business strategies followed by intermediation services providers, showing that efficient market structures emerge in equilibrium, as well as some specific form of inefficient structures.
Supply function equilibria in oligopoly under uncertainty
Paul Klemperer,Margaret A. Meyer +1 more
TL;DR: In this paper, the authors model an oligopoly facing uncertain demand in which each firm chooses as its strategy a "supply function" relating its quantity to its price, and prove the existence of a Nash equilibrium in supply functions for a symmetric oligopoly producing a homogeneous good.
1.5K
Two-Sided Markets, Competitive Bottlenecks, and Exclusive Contracts
Mark Armstrong,Julian Wright +1 more
TL;DR: In this article, the authors provide a framework for analyzing two-sided markets that allows for different degrees of product differentiation on each side of the market and show that competitive bottlenecks arise endogenously.