Complementary Platforms

Jo Reynaerts and Patrick Van Cayseele

LICOS Discussion Papers from LICOS - Centre for Institutions and Economic Performance, KU Leuven

Abstract: We introduce an analytical framework close to the canonical model of platform competition investigated by Rochet and Tirole (2006) to study pricing decisions in two-sided markets when two or more platforms are needed simultaneously for the successful completion of a transaction. The model developed is a natural extension of the Cournot-Ellet theory of complementary monopoly featuring clear cut asymmetric single- and multihoming patterns across the market. The results indicate that the so-called anticommons problem generalizes to two-sided markets because individual platforms do not take into account the negative pricing externality they exert on the other platforms. As a result, mergers between such platforms may be welfare enhancing, but involve redistribution of surplus from one side of the market to the other. Moreover, the limit of an atomistic allocation of property rights however is not monopoly pricing, indicating that there also exist differences with the received theory of complementarity.

Keywords: Two-Sided Markets; Complements; The Anticommons Problem (search for similar items in EconPapers)
JEL-codes: D43 D62 K11 L13 L4 L5 (search for similar items in EconPapers)
Pages: 36 pages
Date: 2007
New Economics Papers: this item is included in nep-com, nep-law, nep-mic and nep-net
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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http://www.econ.kuleuven.be/licos/publications/dp/dp186.pdf

Related works:
Journal Article: Complementary Platforms (2011)
Working Paper: Complementary platforms (2007)
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Persistent link: https://EconPapers.repec.org/RePEc:lic:licosd:18607

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