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Asymmetric Platform Oligopoly

Author

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  • Martin Peitz
  • Susumu Sato

Abstract

We propose a tractable model of asymmetric platform oligopoly with logit demand in which users from two distinct groups are subject to within-group and cross-group network effects and decide which platform to join. We characterize the equilibrium when platforms manage user access by setting participation fees for each user group. We explore the effects of platform entry, a change of incumbent platforms’ quality under free entry, and the degree of compatibility. We show how the analysis can be extended to partial user participation.

Suggested Citation

  • Martin Peitz & Susumu Sato, 2023. "Asymmetric Platform Oligopoly," CRC TR 224 Discussion Paper Series crctr224_2023_428v3, University of Bonn and University of Mannheim, Germany, revised Sep 2024.
    • Handle: RePEc:bon:boncrc:crctr224_2023_428v3
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    File URL: https://www.crctr224.de/research/discussion-papers/archive/dp428
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    More about this item

    Keywords

    oligopoly theory; aggregative games; network effects; two-sided markets; two-sided single-homing; entry;
    All these keywords.

    JEL classification:

    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L41 - Industrial Organization - - Antitrust Issues and Policies - - - Monopolization; Horizontal Anticompetitive Practices
    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection

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