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Platform Ownership

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Author Info
Nocke, Volker
Peitz, Martin
Stahl, Konrad O.

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Abstract

We develop a general theoretical framework of trade on a platform on which buyers and sellers interact. The platform may be owned by a single large, or many small independent or vertically integrated intermediaries. There also may be free entry into the market for platform slots, or platform owners my form a club that restricts entry. We provide a positive and normative analysis of the impact of platform ownership structure on platform size. The strength of network effects is important in the ranking of ownership structures by induced equilibrium platform size and welfare. We develop an intuitive taxonomy of these towards developing our results. We show that while vertical integration may be welfare-enhancing if network effects are weak, monopoly platform ownership is socially preferred if they are strong. These are also the ownership structures likely to emerge.

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Publisher Info
Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 4657.

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Date of creation: Oct 2004
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Handle: RePEc:cpr:ceprdp:4657

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Related research
Keywords: intermediation; network effects; product diversity; two-sided markets;

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Find related papers by JEL classification:
D40 - Microeconomics - - Market Structure and Pricing - - - General
L10 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - General

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References listed on IDEAS
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    Other versions:
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  15. Economides, Nicholas, 1996. "The economics of networks," International Journal of Industrial Organization, Elsevier, vol. 14(6), pages 673-699, October. [Downloadable!] (restricted)
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    Other versions:
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. María Fernanda Viecens, 2006. "Two-Sided Platforms With Endogenous Quality Differentiation," Economics Working Papers we061204, Universidad Carlos III, Departamento de Economía. [Downloadable!]
  2. Andras Niedermayer, 2005. "Does a Platform Owning Monopolist Want Competition?," Diskussionsschriften dp0517, Universitaet Bern, Departement Volkswirtschaft. [Downloadable!]
  3. Andrea Galeotti & José Luis Moraga-González, 2008. "Platform Intermediation in a Market for Differentiated Products," Tinbergen Institute Discussion Papers 08-020/1, Tinbergen Institute. [Downloadable!]
    Other versions:
  4. Schmidtke, Richard, 2006. "Two-Sided Markets with Pecuniary and Participation Externalities," Discussion Papers in Economics 963, University of Munich, Department of Economics. [Downloadable!]
  5. Andras Niedermayer, 2006. "Does a Platform Monopolist Want Competition?," Diskussionsschriften dp0604, Universitaet Bern, Departement Volkswirtschaft. [Downloadable!]
  6. Beschorner, Patrick Frank Ern, 2008. "Do Consumers Benefit from Concentration in the New Economy?: A Review of Google's Mergers, Acquisitions, and Arrangements," ZEW Discussion Papers 08-121, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research. [Downloadable!]
  7. Pollock, R., 2009. "Is Google the next Microsoft? Competition, Welfare and Regulation in Internet Search," Cambridge Working Papers in Economics 0921, Faculty of Economics, University of Cambridge. [Downloadable!]
    Other versions:
  8. Belleflamme, Paul & Peitz, Martin, 2007. "Intermediation and Investment Incentives," CEPR Discussion Papers 6214, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
    Other versions:
  9. Richard Schmidtke, 2006. "Two-Sided Markets with Pecuniary and Participation Externalities," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
  10. Paul Belleflamme & Eric Toulemonde, 2007. "Negative Intra-Group Externalities in Two-Sided Markets," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
    Other versions:
  11. Richard Schmidtke, 2006. "Two-Sided Markets with Pecuniary and Participation Externalities," Discussion Papers 133, SFB/TR 15 Governance and the Efficiency of Economic Systems, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich. [Downloadable!]
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