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Duopolistic Competition between Independent and Collaborative Business-to-Business Marketplaces

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  • Kai Sülzle

Abstract

This paper studies imperfect price competition between two intermediaries in an electronic business-to-business matching market with indirect network externalities. The intermediaries differ with regard to their ownership structure: an independent third party incumbent marketplace competeswith a challenging collaborative buy-side consortium marketplace in terms of attracting buying and selling firms. When firms can register exclusively with at most one intermediary, the incumbent is only able to deter entry if the number of firms taking ownership in the consortium is sufficiently small. Otherwise, the consortium can successfully enter and monopolize the market. When firms can multi-home, i.e. they register simultaneously with both intermediaries, the consortium can always enter while both intermediaries stay in the market with positive profits.

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File URL: http://www.cesifo-group.de/portal/page/portal/DocBase_Content/WP/WP-Ifo_Working_Papers/wp-ifo-2005-2010/IfoWorkingPaper-5.pdf
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Bibliographic Info

Paper provided by Ifo Institute for Economic Research at the University of Munich in its series Ifo Working Paper Series with number Ifo Working Paper No. 5.

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Date of creation: 2005
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Handle: RePEc:ces:ifowps:_5

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Keywords: B2B e-commerce; intermediation; network externalities; matching.;

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References

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  1. Spulber, Daniel F, 1996. "Market Making by Price-Setting Firms," Review of Economic Studies, Wiley Blackwell, vol. 63(4), pages 559-80, October.
  2. Spulber,Daniel F., 2009. "The Theory of the Firm," Cambridge Books, Cambridge University Press, number 9780521736602, October.
  3. Caillaud, Bernard & Jullien, Bruno, 2001. "Competing cybermediaries," European Economic Review, Elsevier, vol. 45(4-6), pages 797-808, May.
  4. Luis Garicano & Steven N. Kaplan, 2001. "The Effects of Business-to-Business E-Commerce on Transaction Costs," NBER Chapters, in: E-commerce, pages 463-485 National Bureau of Economic Research, Inc.
  5. Jackson, Matthew O., 1998. "The Evolution of Social and Economic Networks," Working Papers 1044, California Institute of Technology, Division of the Humanities and Social Sciences.
  6. Daniel F. Spulber, 1996. "Market Microstructure and Intermediation," Journal of Economic Perspectives, American Economic Association, vol. 10(3), pages 135-152, Summer.
  7. Matthew O. Jackson & Asher Wolinsky, 1995. "A Strategic Model of Social and Economic Networks," Discussion Papers 1098R, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  8. Thomas Gehrig, 1993. "Intermediation in Search Markets," Discussion Papers 1058, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  9. Rubinstein, Ariel & Wolinsky, Asher, 1985. "Equilibrium in a Market with Sequential Bargaining," Econometrica, Econometric Society, vol. 53(5), pages 1133-50, September.
  10. Nocke, Volker & Peitz, Martin & Stahl, Konrad O., 2004. "Platform Ownership," CEPR Discussion Papers 4657, C.E.P.R. Discussion Papers.
  11. David Lucking-Reiley & Daniel F. Spulber, 2000. "Business-to-Business Electronic Commerce," Vanderbilt University Department of Economics Working Papers 0016, Vanderbilt University Department of Economics.
  12. Hagiu Andrei, 2007. "Merchant or Two-Sided Platform?," Review of Network Economics, De Gruyter, vol. 6(2), pages 1-19, June.
  13. Caillaud, Bernard & Jullien, Bruno, 2003. " Chicken & Egg: Competition among Intermediation Service Providers," RAND Journal of Economics, The RAND Corporation, vol. 34(2), pages 309-28, Summer.
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Cited by:
  1. Henseler, Marco, 2006. "Horizontal versus Vertical Electronic Business-to-Business Marketplaces," MPRA Paper 40853, University Library of Munich, Germany.

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