Tying in Two-Sided Markets with Multi-Homing
AbstractThis paper analyzes the effects of tying arrangements on market competition and social welfare in two-sided markets when economic agents can engage in multi-homing, that is, they can participate in multiple platforms in order to reap maximal network benefits. The model shows that tying induces more consumers to multi-home and makes platform-specific exclusive content available to more consumers, which is also beneficial to content providers. As a result, tying can be welfare-enhancing if multi-homing is allowed, even in cases where its welfare impacts are negative in the absence of multi-homing. The analysis thus can have important implications for recent antitrust cases in industries where multi-homing is prevalent.
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Bibliographic InfoPaper provided by NET Institute in its series Working Papers with number 06-04.
Length: 30 pages
Date of creation: Sep 2006
Date of revision: Sep 2006
Contact details of provider:
Web page: http://www.NETinst.org/
tying; two-sided markets; (indirect) network effects; multi-homing.;
Other versions of this item:
- L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance
- L4 - Industrial Organization - - Antitrust Issues and Policies
This paper has been announced in the following NEP Reports:
- NEP-ALL-2006-11-12 (All new papers)
- NEP-COM-2006-11-12 (Industrial Competition)
- NEP-MIC-2006-11-12 (Microeconomics)
- NEP-MKT-2006-11-12 (Marketing)
- NEP-NET-2006-11-12 (Network Economics)
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