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Who benefits from increased competition among sellers on B2C platforms?

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  • Belleflamme, Paul
  • Toulemonde, Eric

Abstract

We introduce within-group external effects in the two-sided singlehoming model of Armstrong (2006). First, we propose a general characterization of the platform access fees at the symmetric equilibrium of the game. Second, we combine this general formulation with a specific modeling of the relationship between buyers and sellers on B2C platforms, so as to analyze how changes in the underlying characteristics of the product market affect the equilibrium of the game. We show that sellers may be better off, and buyers worse off, in markets with more sellers. We also show that sellers and buyers prefer full product differentiation while platforms prefer no differentiation.

Suggested Citation

  • Belleflamme, Paul & Toulemonde, Eric, 2016. "Who benefits from increased competition among sellers on B2C platforms?," Research in Economics, Elsevier, vol. 70(4), pages 741-751.
    • Handle: RePEc:eee:reecon:v:70:y:2016:i:4:p:741-751
    DOI: 10.1016/j.rie.2016.08.006
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    1. Paul Belleflamme & Eric Toulemonde, 2009. "Negative Intra-Group Externalities In Two-Sided Markets," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 50(1), pages 245-272, February.
    2. Galeotti, Andrea & Moraga-González, José Luis, 2009. "Platform intermediation in a market for differentiated products," European Economic Review, Elsevier, vol. 53(4), pages 417-428, May.
    3. Belleflamme, Paul & Omrani, Nessrine & Peitz, Martin, 2015. "The economics of crowdfunding platforms," Information Economics and Policy, Elsevier, vol. 33(C), pages 11-28.
    4. Paul Belleflamme & Julien Jacqmin, 2016. "An Economic Appraisal of MOOC Platforms: Business Models and Impacts on Higher Education," CESifo Economic Studies, CESifo Group, vol. 62(1), pages 148-169.
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    8. Belleflamme, Paul & Peitz, Martin, 2010. "Platform competition and seller investment incentives," European Economic Review, Elsevier, vol. 54(8), pages 1059-1076, November.
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    14. Jean‐Charles Rochet & Jean Tirole, 2006. "Two‐sided markets: a progress report," RAND Journal of Economics, RAND Corporation, vol. 37(3), pages 645-667, September.
    15. Galeotti, Andrea & Moraga-González, José Luis, 2009. "Platform intermediation in a market for differentiated products," European Economic Review, Elsevier, vol. 53(4), pages 417-428, May.
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    Cited by:

    1. Etro, Federico, 2021. "Device-funded vs ad-funded platforms," International Journal of Industrial Organization, Elsevier, vol. 75(C).
    2. Federico Etro, 2023. "Hybrid Marketplaces with Free Entry of Sellers," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 62(2), pages 119-148, March.
    3. Neaketa Chawla & Debasis Mondal, 2024. "Seller competition on two-sided platforms," Journal of Economics, Springer, vol. 142(3), pages 213-245, August.
    4. Avdasheva, Svetlana (Авдашева, Светлана) & Shastitko, Andrei (Шаститко, Андрей), 2015. "Alleged Infringement: The Time of Announcement Does Matter [Предмет Обвинения: Время Объявления Имеет Значение]," Ekonomicheskaya Politika / Economic Policy, Russian Presidential Academy of National Economy and Public Administration, vol. 1, pages 72-91, February.
    5. Etro, Federico, 2023. "Platform competition with free entry of sellers," International Journal of Industrial Organization, Elsevier, vol. 89(C).
    6. Federico Etro, 2021. "Product selection in online marketplaces," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 30(3), pages 614-637, August.
    7. Paul Belleflamme & Martin Peitz, 2019. "Managing competition on a two‐sided platform," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 28(1), pages 5-22, January.
    8. Badran, Mona Farid, 2021. "Digital platforms in Africa: A case-study of Jumia Egypt's digital platform," Telecommunications Policy, Elsevier, vol. 45(3).
    9. Badran, Mona Farid, 2018. "Digital Platforms in Developing Countries: "A Case-Study of Jumia Egypt"," 29th European Regional ITS Conference, Trento 2018 184929, International Telecommunications Society (ITS).

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    More about this item

    Keywords

    Two-sided platforms; External effects; E-commerce;
    All these keywords.

    JEL classification:

    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L86 - Industrial Organization - - Industry Studies: Services - - - Information and Internet Services; Computer Software

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