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Tying in Two-Sided Markets with Multi-Homing: Corrigendum and Comment

Author

Listed:
  • Choi, Jay Pil
  • Jullien, Bruno
  • Lefouili, Yassine

Abstract

We identify two issues in Choi's (2010) paper on tying in two-sided markets published in this Journal, and provide solutions to both of them. First, we point out that the equilibrium in the absence of tying requires more restrictive conditions and does not satisfy a natural equilibrium refinement criterion. We offer an alternative timing structure that validates the equilibrium derived in Choi (2010) under the conditions provided there. Second, we show that his equilibrium analysis with tying ignores a profitable deviation. We rectify this analysis under our alternative timing structure and derive the (mixed-strategy) equilibrium with tying. We also show by means of simulations that tying is welfare-enhancing whenever it is profitable, which is consistent with the main finding in Choi (2010).

Suggested Citation

  • Choi, Jay Pil & Jullien, Bruno & Lefouili, Yassine, 2017. "Tying in Two-Sided Markets with Multi-Homing: Corrigendum and Comment," TSE Working Papers 17-850, Toulouse School of Economics (TSE).
    • Handle: RePEc:tse:wpaper:32110
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    References listed on IDEAS

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    1. Caillaud, Bernard & Jullien, Bruno, 2003. "Chicken & Egg: Competition among Intermediation Service Providers," RAND Journal of Economics, The RAND Corporation, vol. 34(2), pages 309-328, Summer.
    2. Jay Pil Choi, 2010. "Tying In Two‐Sided Markets With Multi‐Homing," Journal of Industrial Economics, Wiley Blackwell, vol. 58(3), pages 607-626, September.
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    Cited by:

    1. Bruno Jullien & Alessandro Pavan & Marc Rysman, 2021. "Two-sided markets, pricing, and network effects," Post-Print hal-03828345, HAL.
    2. Jullien, Bruno & Sand-Zantman, Wilfried, 2021. "The Economics of Platforms: A Theory Guide for Competition Policy," Information Economics and Policy, Elsevier, vol. 54(C).
    3. Yannis Bakos & Hanna Halaburda, 2020. "Platform Competition with Multihoming on Both Sides: Subsidize or Not?," Management Science, INFORMS, vol. 66(12), pages 5599-5607, December.
    4. Leonardo Madio & Carroni, Elias & Shekhar, Shiva, 2019. "Superstars in two-sided markets: exclusives or not?," 2019 Papers pma2756, Job Market Papers.
    5. Fuyuki Saruta, 2022. "Exclusive Contracts and Multihoming Agents in Two-sided Markets," Discussion Paper Series DP2022-26, Research Institute for Economics & Business Administration, Kobe University.
    6. Afilipoaie, Adelaida & Donders, Karen & Ballon, Pieter, 2022. "The European Commission's approach to mergers involving software-based platforms: Towards a better understanding of platform power," Telecommunications Policy, Elsevier, vol. 46(5).
    7. Shekhar, Shiva, 2020. "Zero Pricing Platform Competition," MPRA Paper 99364, University Library of Munich, Germany.
    8. Singh, Neeraj & Kumar, Niraj & Kapoor, Sanjeev, 2022. "Consumer multihoming predisposition on food platforms: Does gender matter?," Journal of Retailing and Consumer Services, Elsevier, vol. 67(C).

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    More about this item

    Keywords

    Tying; Two-Sided Markets; Multi-Homing;
    All these keywords.

    JEL classification:

    • D4 - Microeconomics - - Market Structure, Pricing, and Design
    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance
    • L5 - Industrial Organization - - Regulation and Industrial Policy

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