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Innovation and competition in two-sided markets: the case of payment systems

Armando Calabrese, Massimo Gastaldi, Irene Iacovelli and Nathan Levialdi Ghiron

International Journal of Management and Network Economics, 2008, vol. 1, issue 1, 1-20

Abstract: This paper proposes a model which analyses the role of technological innovation in the competitiveness and efficiency of the payment system industry. The performance of this industry is described through the use of a mathematical model and the strategies of platforms are analysed considering the role of technological innovation. The paper shows how technological development is the most common competitive strategy in an oligopolistic market of payment platforms. Moreover, the paper shows that these platforms can develop product/service innovations or price differentiations in order to deal with market competition effectively.

Keywords: two-sided markets; payment systems; technological innovation; network economics; competition; mathematical modelling; technological development; price differentiation; product innovation; service innovation. (search for similar items in EconPapers)
Date: 2008
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