Platform Oligopoly with Endogenous Homing: Implications for Mergers and Free Entry

Takanori Adachi, Susumu Sato and Mark Tremblay

Discussion papers from Graduate School of Economics , Kyoto University

Abstract: Consumer multi-homing is considered to be critical for competition policy regarding digital platforms. To assess the role of consumer multi-homing in competition policy, we embed consumer multi-homing into a model of oligopolistic competition between two-sided platforms and apply it to mergers and free entry. We find that a required level of merger-specific cost reduction is larger if consumers benefit more from multi-homing and that the equilibrium level of platform entry can be insufficient in the presence of consumer multi-homing. We also show that reductions to sellers' benefit from multi- homing reduces entry (i.e., is an e ective barrier to entry). These results contrast the popular belief that multi-homing mitigates the need for stricter competition policy.

Keywords: Two-sided markets; Indict network externalities; Multi-homing; Platform entry; Platform mergers. (search for similar items in EconPapers)
JEL-codes: D40 L10 L20 L40 (search for similar items in EconPapers)
Pages: 35
Date: 2022-03
New Economics Papers: this item is included in nep-com, nep-gth, nep-mic, nep-pay and nep-reg
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Journal Article: Platform Oligopoly with Endogenous Homing: Implications for Mergers and Free Entry (2023)
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Persistent link: https://EconPapers.repec.org/RePEc:kue:epaper:e-21-009

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