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Homing choice and platform pricing strategy

Shiva Shekhar

No 247, DICE Discussion Papers from University of Düsseldorf, Düsseldorf Institute for Competition Economics (DICE)

Abstract: We compare a discriminatory pricing regime with a non-discriminatory regime in a competitive bottleneck model where content providers endogenously sort into single or multi-homers. We find that consumer prices rise when the share of single-homers increases in the non-discriminatory case, while they stay constant in the discriminatory pricing regime. A discriminatory pricing regime leads to higher platform profits than the non-discriminatory regime when the share of single-homers are relatively high. When the share of single-homers is relatively high (low), the discriminatory pricing regime leads to higher (lower) consumer surplus and social welfare when compared with the non-discriminatory regime.

Keywords: price discrimination; two-sided markets; platforms; platform competition; network effects (search for similar items in EconPapers)
JEL-codes: D43 L14 L82 L13 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-com, nep-ind, nep-mic, nep-mkt and nep-reg
Date: 2017
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:dicedp:247

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