Year: 2008
Type: preprint
Abstract: The paper examines competition between multi-sided platforms and analyzes the pro…ts and the pricing strategies that emerge.Focusing on a Stackelberg pricing game it shows how price discrimination helps a platform coordinating the choices of consumers.After providing general bonds on equilibrium pro…ts, it characterizes equilibria assuming a particular resolution of the coordination game played by platforms' users, that favours the leader (favorable expectations).Even under the most advantageous conditions, a platform's may be adversely a¤ected by the ability of competitors to exploit asymmetries in multi-sided externalities.Results are then used to characterize the equilibria of a game of perfect price-discrimination by competiting networks, where the largest network is shown to be too small from a welfare perspective, and of a game with two sides (with sequential and simultaneous prices).Various implication are then discussed, such the possibility of excessive entry or the incentives to interconnect.
Author: Bruno Jullien
Language: English
Subfield: Strategy and Management
Domain: Social Sciences
Open Access status: green
Funder: European University Institute
OpenAlex ID: W1584557333