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Platform competition: Who benefits from multihoming?

Author

Listed:
  • Martin Peitz

    (CESifo - CESifo, Department of Economics and MaCCI, University of Mannheim)

  • Paul Belleflamme

    (AMSE - Aix-Marseille Sciences Economiques - EHESS - École des hautes études en sciences sociales - AMU - Aix Marseille Université - ECM - École Centrale de Marseille - CNRS - Centre National de la Recherche Scientifique, KEDGE Business School [Marseille], CESifo)

Abstract

Competition between two-sided platforms is shaped by the possibility of multihoming (i.e., some users joining both platforms). If initially both sides singlehome, each platform provides users on one side exclusive access to its users on the other side. If then one side multihomes, platforms compete on the singlehoming side and exert monopoly power on the multihoming side. This paper explores the allocative effects of such a change from single- to multihoming. Our results challenge the conventional wisdom, according to which the possibility of multihoming hurts the side that can multihome, while benefiting the other side. This in not always true, as the opposite may happen or both sides may benefit.

Suggested Citation

  • Martin Peitz & Paul Belleflamme, 2019. "Platform competition: Who benefits from multihoming?," Post-Print hal-02137757, HAL.
    • Handle: RePEc:hal:journl:hal-02137757
    DOI: 10.1016/j.ijindorg.2018.03.014
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    References listed on IDEAS

    as
    1. 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.
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    More about this item

    Keywords

    Network effects; Two-sided markets; Platform competition; Competitive bottleneck; Multihoming;
    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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