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Platform competition and willingness to pay in a vertical differentiated two-sided market

Author

Listed:
  • Francesco Angelini

    (Department of Statistical Science "Paolo Fortunati", University of Bologna)

  • Corrado Benassi

    (Dipartimento di Scienze Economiche, Alma Mater Studiorum Università di Bologna)

  • Massimiliano Castellani

    (Department of Statistical Science "Paolo Fortunati", University of Bologna)

Abstract

In this paper we generalize the model of single-homing users in two-sided markets by Gabszewicz and Wauthy [2014] to the case of any logconcave distribution of the willingness to pay (WTP). Our extended model allows us to discuss how distributional assumptions affect equilibrium outcomes, as well as to highlight the role of the assumption that both sides of the market are described by the same distribution of the WTP: while equilibrium does exist when this common distribution is logconcave, our results cast some doubts on existence when the two distributions differ.

Suggested Citation

  • Francesco Angelini & Corrado Benassi & Massimiliano Castellani, 2021. "Platform competition and willingness to pay in a vertical differentiated two-sided market," Economics Bulletin, AccessEcon, vol. 41(2), pages 772-780.
    • Handle: RePEc:ebl:ecbull:eb-21-00089
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    References listed on IDEAS

    as
    1. Luca Lambertini & Raimondello Orsini, 2005. "The Existence Of Equilibrium In A Differentiated Duopoly With Network Externalities," The Japanese Economic Review, Japanese Economic Association, vol. 56(1), pages 55-66, March.
    2. Benassi, Corrado & Castellani, Massimiliano & Mussoni, Maurizio, 2016. "Price equilibrium and willingness to pay in a vertically differentiated mixed duopoly," Journal of Economic Behavior & Organization, Elsevier, vol. 125(C), pages 86-96.
    3. Mark Bagnoli & Ted Bergstrom, 2006. "Log-concave probability and its applications," Studies in Economic Theory, in: Charalambos D. Aliprantis & Rosa L. Matzkin & Daniel L. McFadden & James C. Moore & Nicholas C. Yann (ed.), Rationality and Equilibrium, pages 217-241, Springer.
    4. Ginger Zhe Jin & Marc Rysman, 2015. "Platform Pricing at Sports Card Conventions," Journal of Industrial Economics, Wiley Blackwell, vol. 63(4), pages 704-735, December.
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    More about this item

    Keywords

    Two-sided market; Network externalities; Vertical differentiation; Income distribution.;
    All these keywords.

    JEL classification:

    • D3 - Microeconomics - - Distribution
    • D4 - Microeconomics - - Market Structure, Pricing, and Design

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