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A Preference-Based Model of Competition among Platforms

Paolo Bertoletti

No 468, Working Papers from University of Milano-Bicocca, Department of Economics

Abstract: We propose a novel approach to study competition among platforms. In particular, we consider representative consumer’s preferences over the services platforms provide and the commodities they intermediate. Platforms are assumed to be large, intermediating a variety of commodities offered by sellers under monopolistic competition and free entry, and competing à la Cournot. We use a duopoly setting to discuss the welfare implications of platform exchange commissions, which are typically significant in real-world cases. Our preliminary finding is that positive commission actually worsens consumer welfare by reducing the platform price-adjusted quality indexes.

Keywords: platform competition; two-sided markets; market intermediation (search for similar items in EconPapers)
JEL-codes: D11 L13 L41 L51 (search for similar items in EconPapers)
Pages: 14
Date: 2021-04
New Economics Papers: this item is included in nep-com, nep-gth and nep-ind
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