Competition in two-sided markets (2002 version)

Mark Armstrong

MPRA Paper from University Library of Munich, Germany

Abstract: There are many examples of markets involving two groups of participants who need to interact via intermediaries. Moreover, these intermediaries usually have to compete for business from both groups. Examples include academic publishing (where journals facilitate the interaction between authors and readers), advertising in media markets (where newspapers or TV channels enable adverts from producers to reach consumers), payment systems (where credit cards can be a convenient method of transaction between consumers and retailers), and telecommunications networks (where networks are used to provide links between callers and those who receive calls). The paper surveys recent theoretical work on these two-sided markets. The main questions are (i) what determines which side of the market is subsidized (if either) in order to attract the other side, and (ii) is the resulting outcome socially efficient?

Keywords: Two-sided markets; oligopoly; network effects; intermediation (search for similar items in EconPapers)
JEL-codes: D43 D62 L14 (search for similar items in EconPapers)
Date: 2002-10
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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