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Note on ‘Competition in Two-sided Markets’

Author

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  • Yuyu Zeng

    (VU University Amsterdam, the Netherlands)

  • Harold Houba

    (VU University Amsterdam, the Netherlands)

  • Gerard van der Laan

    (VU University Amsterdam, the Netherlands)

Abstract

We extend the models in ("Competition in two-sided markets" of Armstrong (2006, Rand Journal of Economics ) by adding within-group externalities. In the monopoly and duopoly cases, positive within-group externalities reduce the price of the own group. Negative externalities have an opposite price effect. In the case of a competitive bottleneck, we show by examples that within a certain range of parameter values, a novel phenomenon arises that the platform attracts more agents from one of the groups compared with the social optimum.

Suggested Citation

  • Yuyu Zeng & Harold Houba & Gerard van der Laan, 2015. "Note on ‘Competition in Two-sided Markets’," Tinbergen Institute Discussion Papers 15-080/II, Tinbergen Institute.
    • Handle: RePEc:tin:wpaper:20150080
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    References listed on IDEAS

    as
    1. Van Cayseele Patrick & Reynaerts Jo, 2011. "Complementary Platforms," Review of Network Economics, De Gruyter, vol. 10(1), pages 1-33, March.
    2. 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.
    3. Mark Armstrong Author-Email: mark.armstrong@ucl.ac.uk Author-Workplace-Name: University College of London, 2006. "Competition in Two-Sided Markets," RAND Journal of Economics, The RAND Corporation, vol. 37(3), pages 668-691, Autumn.
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    More about this item

    Keywords

    Competition economics; two-sided market;

    JEL classification:

    • D4 - Microeconomics - - Market Structure, Pricing, and Design
    • L4 - Industrial Organization - - Antitrust Issues and Policies

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