Platform Design Biases in Two-Sided Markets

Jay Pil Choi and Doh-Shin Jeon

No 20-1143, TSE Working Papers from Toulouse School of Economics (TSE)

Abstract: We investigate the relationship between market structure and platforms'incentives to adopt technological innovations in two-sided markets, where platforms may find it optimal to charge zero price on the consumer side and to extract surplus on the ad- vertising side. We consider innovations that a¤ect the two sides in an opposite way. We compare private incentives with social incentives and find that the bias in tech- nology adoption depends crucially on whether the non-negative pricing constraint binds or not. Our results provide a rationale for a tougher competition policy to curb concentration if competition authorities put more weight on consumer surplus in welfare calculations.

Keywords: Technology Adoption; Two-Sided Platforms; Non-Negative Pricing Constraint; Pass-through (search for similar items in EconPapers)
JEL-codes: D4 L1 L5 (search for similar items in EconPapers)
Date: 2020-09
New Economics Papers: this item is included in nep-com, nep-mic and nep-pay
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:tse:wpaper:124669

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