The Effects of Competition and Entry in Multi-sided Markets

• 成果类型: Article
• 署名作者: Tan, Guofu; Zhou, Junjie
• 署名单位: University of Southern California; National University of Singapore
• 刊物名称: REVIEW OF ECONOMIC STUDIES
• ISSN/ISSBN: 0034-6527
• DOI: 10.1093/restud/rdaa036
• 发表日期: 2021
• 页码: 1002-1030
• 关键词: 2-sided markets; imperfect competition; discrete-choice; mergers; externalities; equilibrium; provision; MODEL

摘要

We study price competition and entry of platforms in multi-sided markets. Utilizing the simplicity of the equilibrium pricing formula in our setting with heterogeneity of customers' membership benefits, we demonstrate that in the presence of externalities, the standard effects of competition can be reversed: as platform competition increases, prices, and platform profits can go up and consumer surplus can go down. We identify economic forces that jointly determine the social inefficiency of the free-entry equilibrium and provide conditions under which free entry is socially excessive as well as an example in which free entry is socially insufficient.