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Please use this identifier to cite or link to this item: http://hdl.handle.net/2451/29875

Title: Imperfect Platform Competition: A General Framework
Authors: White, Alexander - Harvard University
Weyl, E. Glen - Harvard University and Toulouse School of Economics
Keywords: Two-sided Markets, Multi-sided Platforms, Quality Competition, Oligopoly, Antitrust of Network Industries
Issue Date: 2010
Series/Report no.: Net Institute Working Paper;10-17
Abstract: We propose a general model of imperfect competition among multi-product firms, the consumption of whose goods yields externalities from one consumer to another. We extend the allocation approach of Weyl (2010)'s monopoly model, proposing a solution concept, Insulated Equilibrium, that allows for tractable analysis of competition. In such an equilibrium each firm's price on one side of the market adjusts to all firms' participation levels on the other side, so as to insulate its own allocation. This eliminates both the indeterminacy of consumer reactions once platforms have set their tariffs and the multiplicity of reaction functions that platforms can have to one another's tariffs. Our approach allows us to derive intuitive first-order conditions characterizing equilibrium without restrictive assumptions and to analyze the effects of competition, mergers and regulation.
URI: http://hdl.handle.net/2451/29875
Appears in Collections:Economics Working Papers

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