Working Paper: CEPR ID: DP15204
Authors: Paul Belleflamme; Martin Peitz; Eric Toulemonde
Abstract: We introduce asymmetries across platforms in the linear model of competing two-sided platforms with singlehoming on both sides and fully characterize the price equilibrium. We identify market environments in which one platform has a larger market share on both sides while obtaining a lower profit than the other platform. This platform enjoys a competitive advantage on one or both sides. Our finding raises further doubts on using market shares as a measure of market power in platform markets.
Keywords: two-sided platforms; market share; market power; oligopoly; network effects; antitrust
JEL Codes: D43; L13; L86
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| market share (L17) | profit (L21) |
| competitive advantage (L21) | market share (L17) |
| cross-group network effects (D85) | market share (L17) |
| price sensitivity differences (D40) | profit (L21) |