Platform competition and price discrimination

Neaketa Chawla () and Debasis Mondal
Additional contact information
Neaketa Chawla: Brij Disa Centre of Data Science and Artificial Intelligence, Indian Institute of Management

Indian Economic Review, 2022, vol. 57, issue 1, No 1, 21 pages

Abstract: Abstract We study price discrimination strategy of an Incumbent platform that faces competition from an Entrant. We introduce heterogeneous agents on the consumer side, where buyers assign different values to the interaction benefits generated on a platform. We analyse a dominant firm equilibrium, where the incumbent platform offers two versions of its service to the consumers. The results are compared across two scenarios. The first is when sellers are allowed to multi-home and the second is when they can only join a single platform. We find that in case of multi-homing, the platform cannot charge any consumer group more than the marginal cost of the service provided to them. In the singe-homing case, the strength of indirect network effects determines the side from which platform extracts a positive surplus.

Keywords: Two-sided markets; Platforms; Network effects; Price discrimination; Platform competition (search for similar items in EconPapers)
JEL-codes: L1 L11 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://link.springer.com/10.1007/s41775-022-00138-9 Abstract (text/html)
Access to the full text of the articles in this series is restricted.

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:spr:inecre:v:57:y:2022:i:1:d:10.1007_s41775-022-00138-9

Ordering information: This journal article can be ordered from
https://www.springer.com/economics/journal/41775

DOI: 10.1007/s41775-022-00138-9

Access Statistics for this article

Indian Economic Review is currently edited by Uday Bhanu Sinha, Abhijit Banerji, Shreekant Gupta and J.V. Meenakshi

More articles in Indian Economic Review from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().