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Competition in two-sided markets

Armstrong, M.; (2006) Competition in two-sided markets. The RAND Journal of Economics , 37 (3) pp. 668-691. Green open access

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Many markets involve two groups of agents who interact via "platforms," where one group's benefit from joining a platform depends on the size of the other group that joins the platform. I present three models of such markets: a monopoly platform; a model of competing platforms where agents join a single platform; and a model of "competitive bottlenecks" where one group joins all platforms. The determinants of equilibrium prices are (i) the magnitude of the cross-group externalities, (ii) whether fees are levied on a lump-sum or per-transaction basis, and (iii) whether agents join one platform or several platforms.

Type: Article
Title: Competition in two-sided markets
Open access status: An open access version is available from UCL Discovery
Publisher version: http://www.rje.org/
Language: English
Additional information: Please also see http://eprints.ucl.ac.uk/14583 for a related item
Keywords: JEL classification: D40, D62, D85, L11, L14. Competition, equilibrium
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/4324
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