Platform Ownership

Konrad Stahl, Volker Nocke and Martin Peitz

No 4657, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: We develop a general theoretical framework of trade on a platform on which buyers and sellers interact. The platform may be owned by a single large, or many small independent or vertically integrated intermediaries. There also may be free entry into the market for platform slots, or platform owners my form a club that restricts entry. We provide a positive and normative analysis of the impact of platform ownership structure on platform size. The strength of network effects is important in the ranking of ownership structures by induced equilibrium platform size and welfare. We develop an intuitive taxonomy of these towards developing our results. We show that while vertical integration may be welfare-enhancing if network effects are weak, monopoly platform ownership is socially preferred if they are strong. These are also the ownership structures likely to emerge.

Keywords: Two-sided markets; Network effects; Intermediation; Product diversity (search for similar items in EconPapers)
JEL-codes: D40 L10 (search for similar items in EconPapers)
Date: 2004-10
New Economics Papers: this item is included in nep-com, nep-mic and nep-net
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Citations: View citations in EconPapers (6)

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Related works:
Journal Article: Platform Ownership (2007)
Working Paper: Platform Ownership (2004)
Working Paper: Platform Ownership (2004)
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