Platform Competition with Endogenous Multihoming
AbstractA model of two-sided market (for credit cards) is introduced and discussed. In this model, agents can join none, one, or more than one platform (multihoming), depending on access prices and the choices made by agents on the opposite market side. Although emerging multihoming patterns are, clearly, one aspect of equilibrium in a two-sided market, this issue has not yet been thoroughly addressed in the literature. This paper provides a general theoretical framework, in which homing partitions are conceived as one aspect of market equilibrium, rather than being set ex-ante, through ad-hoc assumptions. The emergence of a specific equilibrium partition is a consequence of: (1) the structure of costs and benefits, (2) the degree and type of heterogeneity among agents, (3) the intensity of platform competition.
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Bibliographic InfoPaper provided by Fondazione Eni Enrico Mattei in its series Working Papers with number 2005.20.
Date of creation: Jan 2005
Date of revision:
Two-sided markets; Network externalities; Standards; Platforms; Multihoming;
Find related papers by JEL classification:
- D85 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Network Formation
- L10 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - General
- L15 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Information and Product Quality
- L89 - Industrial Organization - - Industry Studies: Services - - - Other
This paper has been announced in the following NEP Reports:
- NEP-ALL-2005-04-24 (All new papers)
- NEP-COM-2005-04-24 (Industrial Competition)
- NEP-IND-2005-04-24 (Industrial Organization)
- NEP-MIC-2005-04-24 (Microeconomics)
- NEP-NET-2005-04-24 (Network Economics)
- NEP-TID-2005-04-24 (Technology & Industrial Dynamics)
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.:
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