The tension between market shares and profit under platform competition
(2022) International Journal of Industrial Organization — (2022)
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- 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 is compatible with higher price-cost margins on one or both sides, noting that in the latter case one margin must be negative. Our finding raises further doubts on using market shares as a measure of market power in platform markets.
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Belleflamme, P., Peitz, M., & Toulemonde, E. (2022). The tension between market shares and profit under platform competition. International Journal of Industrial Organization. Accepted/in-press. https://doi.org/10.1016/j.ijindorg.2021.102807 (Original work published 2022)