Tying in Two-Sided Markets with Multi-Homing

Jay Choi

No 2073, CESifo Working Paper Series from CESifo

Abstract: This paper analyzes the effects of tying arrangements on market competition and social welfare in two-sided markets when economic agents can engage in multi-homing; that is, they can participate in multiple platforms in order to reap maximal network benefits. The model shows that tying induces more consumers to multi-home and makes platform-specific exclusive contents available to more consumers, which is also beneficial to content providers. As a result, tying can be welfare-enhancing if multi-homing is allowed, even in cases where its welfare impacts are negative in the absence of multi-homing. The analysis thus can have important implications for recent antitrust cases in industries where multi-homing is prevalent.

Keywords: tying; two-sided markets; (indirect) network effects; multi-homing (search for similar items in EconPapers)
Date: 2007
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Citations: View citations in EconPapers (3)

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Related works:
Journal Article: TYING IN TWO‐SIDED MARKETS WITH MULTI‐HOMING (2010)
Working Paper: Tying in Two-Sided Markets with Multi-Homing (2006)
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Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_2073

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