Tying in Two-Sided Markets with Multi-Homing

Jay Choi

No 06-04, Working Papers from NET Institute

Abstract: This paper analyzes the effects of tying arrangements on market competition and social welfare in two-sided markets when economic agents can engage in multi-homing, that is, they can participate in multiple platforms in order to reap maximal network benefits. The model shows that tying induces more consumers to multi-home and makes platform-specific exclusive content available to more consumers, which is also beneficial to content providers. As a result, tying can be welfare-enhancing if multi-homing is allowed, even in cases where its welfare impacts are negative in the absence of multi-homing. The analysis thus can have important implications for recent antitrust cases in industries where multi-homing is prevalent.

Keywords: tying; two-sided markets; (indirect) network effects; multi-homing. (search for similar items in EconPapers)
JEL-codes: L1 L4 (search for similar items in EconPapers)
Pages: 30 pages
Date: 2006-09, Revised 2006-09
New Economics Papers: this item is included in nep-com, nep-mic, nep-mkt and nep-net
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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Related works:
Journal Article: TYING IN TWO‐SIDED MARKETS WITH MULTI‐HOMING (2010)
Working Paper: Tying in Two-Sided Markets with Multi-Homing (2007)
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Persistent link: https://EconPapers.repec.org/RePEc:net:wpaper:0604

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