The tension between market shares and profit under platform competition

Paul Belleflamme, Martin Peitz and Eric Toulemonde

No 3191, LIDAM Reprints CORE from Université catholique de Louvain, Center for Operations Research and Econometrics (CORE)

Abstract: We introduce asymmetries across platforms in the linear model of competing two-sided platforms with singlehoming on both sides and fully characterize the price equilibrium. We identify market environments in which one platform has a larger market share on both sides while obtaining a lower profit than the other platform. This is compatible with higher price-cost margins on one or both sides, noting that in the latter case one margin must be negative. Our finding raises further doubts on using market shares as a measure of market power in platform markets.

Keywords: Two-sided platforms; Market share; Market power; Oligopoly; Network effects; Antitrust (search for similar items in EconPapers)
JEL-codes: D43 L13 L86 (search for similar items in EconPapers)
Pages: 16
Date: 2022-10-01
Note: In: International Journal of Industrial Organization, 2022, vol. 81, 102807
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Citations: View citations in EconPapers (5)

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Related works:
Journal Article: The tension between market shares and profit under platform competition (2022)
Working Paper: The Tension Between Market Shares and Profit Under Platform Competition (2020)
Working Paper: The Tension Between Market Shares and Profit Under Platform Competition (2020)
Working Paper: The tension between market shares and profit under platform competition (2020)
Working Paper: The tension between market shares and profit under platform competition (2020)
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Persistent link: https://EconPapers.repec.org/RePEc:cor:louvrp:3191

DOI: 10.1016/j.ijindorg.2021.102807

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