{"title":"Cournot platform competition with mixed-homing","authors":"Mark J. Tremblay , Takanori Adachi , Susumu Sato","doi":"10.1016/j.ijindorg.2023.103002","DOIUrl":null,"url":null,"abstract":"<div><p>Competition in quantity dates back to Cournot (1838) for traditional markets and Katz and Shapiro (1985) for markets with direct network effects. In this paper, we consider Cournot platform competition in two-sided markets with indirect network effects while allowing for single-, multi-, and mixed-homing allocations. We find that the markup and markdown terms that are typically found in monopoly two-sided pricing are distorted toward zero when platform competition intensifies. We also generalize the monopoly platform Lerner indices from Armstrong (2006) and Weyl (2010) to include competition and mixed-homing allocations. Lastly, we show that welfare decreases in the number of platforms for the most commonly considered homing allocations, highlighting how the welfare loss from breaking up a network across smaller platforms can outweigh the welfare benefits from lower aggregate prices in a setting where platforms are homogenous.</p></div>","PeriodicalId":48127,"journal":{"name":"International Journal of Industrial Organization","volume":"91 ","pages":"Article 103002"},"PeriodicalIF":1.7000,"publicationDate":"2023-07-17","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":"0","resultStr":null,"platform":"Semanticscholar","paperid":null,"PeriodicalName":"International Journal of Industrial Organization","FirstCategoryId":"96","ListUrlMain":"https://www.sciencedirect.com/science/article/pii/S0167718723000838","RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":null,"EPubDate":"","PubModel":"","JCR":"Q2","JCRName":"ECONOMICS","Score":null,"Total":0}
引用次数: 0
Abstract
Competition in quantity dates back to Cournot (1838) for traditional markets and Katz and Shapiro (1985) for markets with direct network effects. In this paper, we consider Cournot platform competition in two-sided markets with indirect network effects while allowing for single-, multi-, and mixed-homing allocations. We find that the markup and markdown terms that are typically found in monopoly two-sided pricing are distorted toward zero when platform competition intensifies. We also generalize the monopoly platform Lerner indices from Armstrong (2006) and Weyl (2010) to include competition and mixed-homing allocations. Lastly, we show that welfare decreases in the number of platforms for the most commonly considered homing allocations, highlighting how the welfare loss from breaking up a network across smaller platforms can outweigh the welfare benefits from lower aggregate prices in a setting where platforms are homogenous.
期刊介绍:
The IJIO is an international venture that aims at full coverage of theoretical and empirical questions in industrial organization. This includes classic questions of strategic behavior and market structure. The journal also seeks to publish articles dealing with technological change, internal organization of firms, regulation, antitrust and productivity analysis. We recognize the need to allow for diversity of perspectives and research styles in industrial organization and we encourage submissions in theoretical work, empirical work, and case studies. The journal will also occasionally publish symposia on topical issues.