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Platform Competition in Two-Sided Markets

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  • Rochet, Jean-Charles
  • Tirole, Jean

Abstract

Many if not most markets with network externalities are two-sided. To succeed, platforms in industries such as software, portals and media, payment systems and the Internet, must "get both sides of the market on board ". Accordingly, platforms devote much attention to their business model, that is to how they court each side while making money overall. The paper builds a model of platform competition with two-sided markets. It unveils the determinants of price allocation and enduser surplus for different governance structures (profit-maximizing platforms and not-for-profit joint undertakings), and compares the outcomes with those under an integrated monopolist and a Ramsey planner.

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Bibliographic Info

Paper provided by Institut d'Économie Industrielle (IDEI), Toulouse in its series IDEI Working Papers with number 152.

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Date of creation: 2003
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Publication status: Published in Journal of the European Economic Association, vol.�1, n°4, juin 2003, p.�990-1029.
Handle: RePEc:ide:wpaper:654

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