 Cournot platform competition with mixed-homingMark J. Tremblay, Takanori Adachi and Susumu Sato International Journal of Industrial Organization, 2023, vol. 91, issue C 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. Keywords: Two-sided markets; Network externalities; Lerner index; Single-homing; Multi-homing (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:indorg:v:91:y:2023:i:c:s0167718723000838 DOI: 10.1016/j.ijindorg.2023.103002 Access Statistics for this article International Journal of Industrial Organization is currently edited by P. Bajari, B. Caillaud and N. Gandal More articles in International Journal of Industrial Organization from Elsevier |
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