Introduction to the special issue on platforms
Luis Cabral, Martin Peitz, and Julian Wright
Managing competition on a two‐sided platform
Paul Belleflamme and Martin Peitz
In this paper, we address how seller competition affects platform pricing, product variety, and the number of platforms that carry trade.
In this paper, we address how seller competition affects platform pricing, product variety, and the number of platforms that carry trade.
Friends or foes? Examining platform owners’ entry into complementors’ spaces
Feng Zhu
This paper surveys empirical studies that examine the direct entry of platform owners into complementors’ product spaces. It finds that both the motivation and impact of such entries on complementors are multifaceted. The motivation behind platform owners’ direct entry goes beyond value capture, and the impact of platform entry on complementors varies across empirical settings.
This paper surveys empirical studies that examine the direct entry of platform owners into complementors’ product spaces. It finds that both the motivation and impact of such entries on complementors are multifaceted. The motivation behind platform owners’ direct entry goes beyond value capture, and the impact of platform entry on complementors varies across empirical settings.
Platform competition: Betfair and the UK market for sports betting
Ramon Casadesus‐Masanell and Neil Campbell
We examine two episodes of strategic interaction in the UK betting industry: (a) Betfair (an entrant multisided platform, or MSP) versus Flutter (also an MSP), and (b) Betfair versus traditional bookmakers. We argue that the literature would benefit from work that endogenizes platform design and that considers the possible competitive and cooperative interactions between the business models of traditional incumbents and those of potential innovative MSP entrants.
We examine two episodes of strategic interaction in the UK betting industry: (a) Betfair (an entrant multisided platform, or MSP) versus Flutter (also an MSP), and (b) Betfair versus traditional bookmakers. We argue that the literature would benefit from work that endogenizes platform design and that considers the possible competitive and cooperative interactions between the business models of traditional incumbents and those of potential innovative MSP entrants.
Incumbency advantage and its value
Gary Biglaiser, Emilio Calvano, and Jacques Crémer
The aim of this paper is to discuss some recent work on “incumbency advantage.” That is, the fact that firms already installed generate higher profits than entrants even if the latter offer identical or even better terms (in terms of price and quality) to consumers.
The aim of this paper is to discuss some recent work on “incumbency advantage.” That is, the fact that firms already installed generate higher profits than entrants even if the latter offer identical or even better terms (in terms of price and quality) to consumers.
Focality advantage in platform competition
Hanna Halaburda and Yaron Yehezkel
We consider a methodology for studying how beliefs shape platform competition based on the notion of a partial focality.
We consider a methodology for studying how beliefs shape platform competition based on the notion of a partial focality.
Towards a theory of platform dynamics
Luís Cabral
I introduce a dynamic framework to analyze platforms. The (single) platform owner sets prices at the beginning of each period. Agents (buyers, sellers, readers, consumers, merchants, etc.) make platform membership decisions occasionally. I show that an optimal platform pricing addresses two externalities: across sides and across time periods. This results in optimal prices which depend on platform size in a nontrivial way
I introduce a dynamic framework to analyze platforms. The (single) platform owner sets prices at the beginning of each period. Agents (buyers, sellers, readers, consumers, merchants, etc.) make platform membership decisions occasionally. I show that an optimal platform pricing addresses two externalities: across sides and across time periods. This results in optimal prices which depend on platform size in a nontrivial way
Platform market competition with endogenous side decisions
Jay Pil Choi and Yusuke Zennyo
This paper develops a framework to analyze platform competition in two‐sided markets in which agents endogenously decide on which side of a platform to join. We characterize the equilibrium pricing structure and perform a comparative statics analysis on how the distribution of agents’ preferences affects the platforms’ profits.
This paper develops a framework to analyze platform competition in two‐sided markets in which agents endogenously decide on which side of a platform to join. We characterize the equilibrium pricing structure and perform a comparative statics analysis on how the distribution of agents’ preferences affects the platforms’ profits.
A theory of multihoming in rideshare competition
Kevin A. Bryan and Joshua S. Gans
We examine competition among ridesharing platforms, where firms compete on both price and the wait time induced with idled drivers. We show that when consumers are the only agents who multihome, idleness is lower in duopoly than when consumers face a monopoly ridesharing platform. When drivers and consumers multihome, idleness further falls to zero as it involves costs for each platform that are appropriated, in part, by their rival.
We examine competition among ridesharing platforms, where firms compete on both price and the wait time induced with idled drivers. We show that when consumers are the only agents who multihome, idleness is lower in duopoly than when consumers face a monopoly ridesharing platform. When drivers and consumers multihome, idleness further falls to zero as it involves costs for each platform that are appropriated, in part, by their rival.
The status of workers and platforms in the sharing economy
Andrei Hagiu and Julian Wright
We consider whether workers who provide their services through online platforms, such as Handy and Uber, should be classified as independent contractors or employees.
We consider whether workers who provide their services through online platforms, such as Handy and Uber, should be classified as independent contractors or employees.
Horizontal mergers between multisided platforms: Insights from Cournot competition
Joao Correia‐da‐Silva Bruno Jullien Yassine Lefouili Joana Pinho
This paper discusses the literature on horizontal mergers between multisided platforms and argues that the Cournot model can provide useful insights into the welfare effects of such mergers.
This paper discusses the literature on horizontal mergers between multisided platforms and argues that the Cournot model can provide useful insights into the welfare effects of such mergers.
The importance of consumer multihoming (joint purchases) for market performance: Mergers and entry in media markets
Simon P. Anderson, Øystein Foros, and Hans Jarle Kind
Consumer “multihoming” (watching two TV channels, or buying two news magazines) has surprisingly important effects on market equilibrium and performance in (two‐sided) media markets. We show this by introducing consumer multihoming and advertising finance into the classic circle model of product differentiation.
Consumer “multihoming” (watching two TV channels, or buying two news magazines) has surprisingly important effects on market equilibrium and performance in (two‐sided) media markets. We show this by introducing consumer multihoming and advertising finance into the classic circle model of product differentiation.
Platform economics and antitrust enforcement: A little knowledge is a dangerous thing
Michael L. Katz
Although the economics of multisided platforms has developed important insights for antitrust policy, there are critical respects in which the body of academic knowledge falls short of providing useful advice to enforcement agencies and the courts. In this note, I identify several areas in which economics research could potentially make significant contributions to the practical antitrust treatment of platforms.
Although the economics of multisided platforms has developed important insights for antitrust policy, there are critical respects in which the body of academic knowledge falls short of providing useful advice to enforcement agencies and the courts. In this note, I identify several areas in which economics research could potentially make significant contributions to the practical antitrust treatment of platforms.
The reflection problem in network effect estimation
Marc RysmanThis paper discusses the empirical identification of network effects in light of the reflection problem of Manski. I argue that models of indirect network effects present reasonable exclusion restrictions to address the challenges of the reflection problem.
The economics of markets and platforms
Daniel F. Spulber
Advances in the study of both markets and platforms contribute to economics. Platforms are typically digital markets, although platforms can designate markets generally. So, the economics of markets and the economics of platforms are one and the same.
Advances in the study of both markets and platforms contribute to economics. Platforms are typically digital markets, although platforms can designate markets generally. So, the economics of markets and the economics of platforms are one and the same.
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