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Horizontal mergers on platform markets: cost savings v. cross-group network effects?

Edmond Baranes, Thomas Cortade and Andreea Cosnita-Langlais ()

MPRA Paper from University Library of Munich, Germany

Abstract: We study the impact of cost savings on the outcome of horizontal mergers between two-sided platforms. We consider four symmetrically differentiated platforms located equidistantly on the unit circle and competing in membership fees. Users on both sides single-home, and we allow for both positive and negative cross-group externalities. We find that the impact of merger cost savings on prices is generally not monotonic, and that synergies are necessary for horizontal platform mergers to be Pareto-improving. Furthermore, the merger may benefit users on one side while harming users on the opposite side, which raises some interesting questions for the enforcement of merger control on two-sided markets.

Keywords: horizontal merger; two-sided markets; cost savings; indirect network effects; merger control (search for similar items in EconPapers)
JEL-codes: D43 K21 L41 (search for similar items in EconPapers)
Date: 2019-05
New Economics Papers: this item is included in nep-com, nep-law, nep-mic, nep-net, nep-pay and nep-reg
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:97459

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