Platform investment and seller competition in two-sided markets

Francesco Angelini, Massimiliano Castellani () and Lorenzo Zirulia
Additional contact information
Massimiliano Castellani: University of Bologna

Journal of Economics, 2025, vol. 144, issue 1, No 1, 29 pages

Abstract: Abstract Platforms can create value within their ecosystems through their investments. In this paper, we model a monopolistic platform choosing the level of a demand-enhancing investment and the membership fees that sellers and buyers pay to access the platform. We find that platform size and quality are large when the degree of product differentiation among sellers and investment productivity are high. Platform profit and users’ surplus are aligned. If the platform sells a product under its brand, incentives to invest are higher, compared to a pure marketplace, and sellers’ surplus can be larger if the degree of product differentiation is low.

Keywords: Two-sided markets; Platform investment; Competition (search for similar items in EconPapers)
JEL-codes: D43 L13 L86 (search for similar items in EconPapers)
Date: 2025
References: Add references at CitEc
Citations:

Downloads: (external link)
http://link.springer.com/10.1007/s00712-024-00874-x Abstract (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:kap:jeczfn:v:144:y:2025:i:1:d:10.1007_s00712-024-00874-x

DOI: 10.1007/s00712-024-00874-x

Access Statistics for this article

Journal of Economics is currently edited by Giacomo Corneo

More articles in Journal of Economics from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().