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Cournot Platform Competition with Mixed-Homing

Mark Tremblay, Takanori Adachi and Susumu Sato

Discussion papers from Graduate School of Economics , Kyoto University

Abstract: Firms in traditional markets often compete in output `a la Cournot. In this paper, we consider Cournot platform competition in two-sided markets with single-, multi-, and mixed-homing allocations and find that the markup and markdown terms are distorted toward zero for (i) greater levels of platform competition and (ii) greater levels of singlehoming. Furthermore, we develop side specific conduct parameters that depend on the underlying platform conduct as well as the homing allocation; these effectively extend the monopoly platform Lerner indices from Armstrong (2006) and Weyl (2010) to the general case of platform competition. Finally, we show that, in utter contrast to the welfare results in traditional Cournot markets, greater Cournot platform competition often decreases welfare across all feasible homing allocations.

Keywords: Two-sided markets; conduct parameter; network externality; Lerner index; single-homing; multi-homing; mixed-homing. (search for similar items in EconPapers)
JEL-codes: D40 L10 L20 L40 (search for similar items in EconPapers)
Pages: 39
Date: 2021-09
New Economics Papers: this item is included in nep-com, nep-ind, nep-mic, nep-pay and nep-reg
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