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Cournot Platform Competition with Mixed-Homing

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  • Mark J. TREMBLAY
  • Takanori ADACHI
  • Susumu SATO

Abstract

Firms in traditional markets often compete in output `a la Cournot. In this paper, we consider Cournot platform competition in two-sided markets with single-, multi-, and mixed-homing allocations and find that the markup and markdown terms are distorted toward zero for (i) greater levels of platform competition and (ii) greater levels of singlehoming. Furthermore, we develop side specific conduct parameters that depend on the underlying platform conduct as well as the homing allocation; these effectively extend the monopoly platform Lerner indices from Armstrong (2006) and Weyl (2010) to the general case of platform competition. Finally, we show that, in utter contrast to the welfare results in traditional Cournot markets, greater Cournot platform competition often decreases welfare across all feasible homing allocations.

Suggested Citation

  • Mark J. TREMBLAY & Takanori ADACHI & Susumu SATO, 2021. "Cournot Platform Competition with Mixed-Homing," Discussion papers e-21-004, Graduate School of Economics , Kyoto University.
    • Handle: RePEc:kue:epaper:e-21-004
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    References listed on IDEAS

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    More about this item

    Keywords

    Two-sided markets; conduct parameter; network externality; Lerner index; single-homing; multi-homing; mixed-homing.;
    All these keywords.

    JEL classification:

    • D40 - Microeconomics - - Market Structure, Pricing, and Design - - - General
    • L10 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - General
    • L20 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - General
    • L40 - Industrial Organization - - Antitrust Issues and Policies - - - General

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