Two-sided markets, competitive bottlenecks and exclusive contracts.
We provide a framework for analyzing two-sided markets that allows for different degrees of product differentiation on each side of the market. When platforms are viewed as homogenous by sellers but heterogeneous by buyers, we show that “competitive bottlenecks” arise endogenously. In equilibrium, p...
| Main Authors: | , |
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| Format: | Journal article |
| Language: | English |
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Springer
2007
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| _version_ | 1797052285028663296 |
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| author | Armstrong, M Wright, J |
| author_facet | Armstrong, M Wright, J |
| author_sort | Armstrong, M |
| collection | OXFORD |
| description | We provide a framework for analyzing two-sided markets that allows for different degrees of product differentiation on each side of the market. When platforms are viewed as homogenous by sellers but heterogeneous by buyers, we show that “competitive bottlenecks” arise endogenously. In equilibrium, platforms do not compete directly for sellers, instead choosing to compete indirectly by subsidizing buyers to join. Sellers are left with none of the gains from trade. Despite this, it is sellers who choose to purchase from multiple platforms (multihome). Finally, the role of exclusive contracts to prevent multihoming is explored. |
| first_indexed | 2024-03-06T18:30:07Z |
| format | Journal article |
| id | oxford-uuid:0954c41b-1820-47db-8c0e-c0fba0f53e1a |
| institution | University of Oxford |
| language | English |
| last_indexed | 2024-03-06T18:30:07Z |
| publishDate | 2007 |
| publisher | Springer |
| record_format | dspace |
| spelling | oxford-uuid:0954c41b-1820-47db-8c0e-c0fba0f53e1a2022-03-26T09:17:55ZTwo-sided markets, competitive bottlenecks and exclusive contracts.Journal articlehttp://purl.org/coar/resource_type/c_dcae04bcuuid:0954c41b-1820-47db-8c0e-c0fba0f53e1aEnglishDepartment of Economics - ePrintsSpringer2007Armstrong, MWright, JWe provide a framework for analyzing two-sided markets that allows for different degrees of product differentiation on each side of the market. When platforms are viewed as homogenous by sellers but heterogeneous by buyers, we show that “competitive bottlenecks” arise endogenously. In equilibrium, platforms do not compete directly for sellers, instead choosing to compete indirectly by subsidizing buyers to join. Sellers are left with none of the gains from trade. Despite this, it is sellers who choose to purchase from multiple platforms (multihome). Finally, the role of exclusive contracts to prevent multihoming is explored. |
| spellingShingle | Armstrong, M Wright, J Two-sided markets, competitive bottlenecks and exclusive contracts. |
| title | Two-sided markets, competitive bottlenecks and exclusive contracts. |
| title_full | Two-sided markets, competitive bottlenecks and exclusive contracts. |
| title_fullStr | Two-sided markets, competitive bottlenecks and exclusive contracts. |
| title_full_unstemmed | Two-sided markets, competitive bottlenecks and exclusive contracts. |
| title_short | Two-sided markets, competitive bottlenecks and exclusive contracts. |
| title_sort | two sided markets competitive bottlenecks and exclusive contracts |
| work_keys_str_mv | AT armstrongm twosidedmarketscompetitivebottlenecksandexclusivecontracts AT wrightj twosidedmarketscompetitivebottlenecksandexclusivecontracts |