Segmentation versus agglomeration: competition between platforms with competitive sellers

Heiko Karle, Martin Peitz and Markus Reisinger

No 17-03, Working Papers from University of Mannheim, Department of Economics

Abstract: For many products, platforms enable sellers to transact with buyers. We show that the competitive conditions among sellers shape the market structure in platform industries. If product market competition is tough, sellers avoid competitors by joining different platforms. This allows platforms to sustain high fees and explains why, for example, in some online markets, several homogeneous platforms segment the market. Instead, if product market competition is soft, agglomeration on a single platform emerges, and platforms fight for the dominant position. These insights give rise to novel predictions. For instance, market concentration and fees are negatively correlated in platform industries, which inverts the standard logic of competition.

Keywords: intermediation; two-sided markets; market structure; price competition; endogenous segmentation (search for similar items in EconPapers)
JEL-codes: D43 L13 (search for similar items in EconPapers)
Date: 2017
New Economics Papers: this item is included in nep-com, nep-gth, nep-mic, nep-mkt, nep-pay and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8)

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https://madoc.bib.uni-mannheim.de/43128/1/17-03_Ka ... z%2C%20Reisinger.pdf

Related works:
Working Paper: Segmentation Versus Agglomeration: Competition Between Platforms With Competitive Sellers (2019)
Working Paper: Segmentation versus Agglomeration: Competition between Platforms with Competitive Sellers (2017)
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Persistent link: https://EconPapers.repec.org/RePEc:mnh:wpaper:43128

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