Will a matchmaker invite her potential rival in?

Rupayan Pal and Vinay Ramani ()
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Vinay Ramani: Indian Institute of Management Udaipur

Indira Gandhi Institute of Development Research, Mumbai Working Papers from Indira Gandhi Institute of Development Research, Mumbai, India

Abstract: This paper analyzes optimal strategies of an incumbent intermediary, who matches agents on the two sides of a market, in the presence of entry threat under alternative scenarios. It shows that, when entry is free, strategic entry accommodation is the optimal choice of the incumbent - not entry deterrence, unless the variation in agents' types is small. Entry accommodation remains optimal for the incumbent for a wide range of parametric configurations even when there is a fixed cost of entry. These results are in sharp contrast to the predictions of existing models of entry.

Keywords: Entry accommodation; Entry deterrence; Intermediation; Matching; Two-sided market (search for similar items in EconPapers)
JEL-codes: D43 L12 L13 (search for similar items in EconPapers)
Pages: 26 pages
Date: 2015-08
New Economics Papers: this item is included in nep-com
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Journal Article: Will a matchmaker invite her potential rival in? (2017)
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Persistent link: https://EconPapers.repec.org/RePEc:ind:igiwpp:2015-025

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