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Collusion Between Non-differentiated Two-Sided Platforms

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  • Martin Peitz
  • Lily Samkharadze

Abstract

Platform competition can be intense when offering non-differentiated services. However, competition is somewhat relaxed if platforms cannot set negative prices. If platforms collude they may be able to implement the outcome that maximizes industry profits. In an infinitely repeated game with perfect monitoring, this is feasible if the discount factor is sufficiently large. When this is not possible, under some condition, a collusive outcome with one-sided rent extraction along the equilibrium path can be sustained that leads to higher profits than the non-cooperative outcome.

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  • Martin Peitz & Lily Samkharadze, 2022. "Collusion Between Non-differentiated Two-Sided Platforms," CRC TR 224 Discussion Paper Series crctr224_2022_331v2, University of Bonn and University of Mannheim, Germany.
    • Handle: RePEc:bon:boncrc:crctr224_2022_331v2
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    File URL: https://www.crctr224.de/research/discussion-papers/archive/dp331
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    1. Martin Peitz & Lily Samkharadze, 2022. "Collusion Between Non-differentiated Two-Sided Platforms," CRC TR 224 Discussion Paper Series crctr224_2022_331v1, University of Bonn and University of Mannheim, Germany.
    2. Jay Pil Choi & Doh-Shin Jeon, 2021. "A Leverage Theory of Tying in Two-Sided Markets with Nonnegative Price Constraints," American Economic Journal: Microeconomics, American Economic Association, vol. 13(1), pages 283-337, February.
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    5. Jean-Charles Rochet & Jean Tirole, 2003. "Platform Competition in Two-Sided Markets," Journal of the European Economic Association, MIT Press, vol. 1(4), pages 990-1029, June.
    6. Caillaud, Bernard & Jullien, Bruno, 2003. "Chicken & Egg: Competition among Intermediation Service Providers," RAND Journal of Economics, The RAND Corporation, vol. 34(2), pages 309-328, Summer.
    7. Joao Correia‐da‐Silva & Bruno Jullien & Yassine Lefouili & Joana Pinho, 2019. "Horizontal mergers between multisided platforms: Insights from Cournot competition," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 28(1), pages 109-124, January.
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    9. Federico Boffa & Lapo Filistrucchi, 2014. "Optimal Cartel Prices in Two-Sided Markets Access," Working Papers 14-19, NET Institute.
    10. Martin Peitz & Lily Samkharadze, 2022. "Collusion Between Non-differentiated Two-Sided Platforms," CRC TR 224 Discussion Paper Series crctr224_2022_331, University of Bonn and University of Mannheim, Germany.
    11. David S. Evans & Richard Schmalensee, 2013. "The Antitrust Analysis of Multi-Sided Platform Businesses," NBER Working Papers 18783, National Bureau of Economic Research, Inc.
    12. Peitz, Martin & Samkharadze, Lily, 2022. "Collusion between non-differentiated two-sided platforms," Economics Letters, Elsevier, vol. 215(C).
    13. Bruno Jullien, 2011. "Competition in Multi-sided Markets: Divide and Conquer," American Economic Journal: Microeconomics, American Economic Association, vol. 3(4), pages 186-220, November.
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    1. Peitz, Martin & Samkharadze, Lily, 2022. "Collusion between non-differentiated two-sided platforms," Economics Letters, Elsevier, vol. 215(C).

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    More about this item

    Keywords

    Two-sided markets; tacit collusion; cartelization; price structure; platform competition;
    All these keywords.

    JEL classification:

    • L41 - Industrial Organization - - Antitrust Issues and Policies - - - Monopolization; Horizontal Anticompetitive Practices
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection

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