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Competition in two-sided markets

Armstrong, M.; (2005) Competition in two-sided markets. (ELSE Working Papers 91). ESRC Centre for Economic Learning and Social Evolution: London, UK. Green open access

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Abstract

There are many examples of markets involving two groups of agents who need to interact via �platforms�, and where one group�s benefit from joining a platform depends on the number of agents from the other group who join the same platform. This paper presents theoretical models for three variants of such markets: a monopoly platform; a model of competing platforms where each agent must choose to join a single platform; and a model of �competing bottlenecks�, where one group wishes to join all platforms. The main determinants of equilibrium prices are (i) the relative sizes of the cross-group externalities, (ii) whether fees are levied on a lump-sum or per-transaction basis, and (iii) whether a group joins just one platform or joins all platforms.

Type: Working / discussion paper
Title: Competition in two-sided markets
Open access status: An open access version is available from UCL Discovery
Publisher version: http://else.econ.ucl.ac.uk/newweb/papers.php
Language: English
Additional information: Please also see http://eprints.ucl.ac.uk/4324/
UCL classification: UCL > Provost and Vice Provost Offices > UCL SLASH > Faculty of S&HS > Dept of Economics
URI: https://discovery.ucl.ac.uk/id/eprint/14583
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