The Role of Coordination Bias in Platform Competition
AbstractThis paper considers platform competition in a two-sided market that includes buyers and sellers. One of the platforms benefits from a favorable coordination bias in the market, in that the two sides are more likely to join the advantaged platform. We find that the degree of the coordination bias affects the platform's decision regarding the business model (i.e., whether to subsidize buyers or sellers), the access fees and the size of the platform. A slight increase in the coordination bias may induce the advantaged platform to switch from subsidizing sellers to subsidizing buyers, or induce the disadvantaged platform to switch from subsidizing buyers to subsidizing sellers. Moreover, in the former case the advantaged platform switches from oversupplying to undersupplying sellers, while in the latter case the disadvantaged platform switches from undersupplying to oversupplying sellers.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by NET Institute in its series Working Papers with number 12-03.
Length: 38 pages
Date of creation: Aug 2012
Date of revision: Sep 2012
Contact details of provider:
Web page: http://www.NETinst.org/
platform competition; two-sided markets; coordination bias;
Find related papers by JEL classification:
- L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
- L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation
This paper has been announced in the following NEP Reports:
- NEP-ALL-2012-10-20 (All new papers)
- NEP-BEC-2012-10-20 (Business Economics)
- NEP-COM-2012-10-20 (Industrial Competition)
- NEP-MIC-2012-10-20 (Microeconomics)
- NEP-NET-2012-10-20 (Network Economics)
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.:
- Lopez, Angel & Rey, Patrick, 2009.
"Foreclosing Competition through Access Charges and Price Discrimination,"
TSE Working Papers
09-056, Toulouse School of Economics (TSE), revised Feb 2012.
- Ángel L. López & Patrick Rey, 2009. "Foreclosing Competition through Access Charges and Price Discrimination," Working Papers 2009.99, Fondazione Eni Enrico Mattei.
- Lopez, Angel L. & Rey, Patrick, 2009. "Foreclosing competition through access charges and price discrimination," IESE Research Papers D/801, IESE Business School.
- Lopez, Angel & Rey, Patrick, 2009. "Foreclosing Competition through Access Charges and Price Discrimination," IDEI Working Papers 570, Institut d'Économie Industrielle (IDEI), Toulouse, revised Feb 2012.
- Claussen, Jörg & Kretschmer, Tobias & Mayrhofer, Philip, 2010.
"Incentives for Quality over Time – The Case of Facebook Applications,"
Discussion Papers in Business Administration
12500, University of Munich, Munich School of Management.
- Jörg Claussen & Tobias Kretschmer & Philip Mayrhofer, 2012. "Incentives for Quality over Time - The Case of Facebook Applications," CEP Discussion Papers dp1133, Centre for Economic Performance, LSE.
- Hanna Halaburda & Yaron Yehezkel, 2011. "Platform Competition under Asymmetric Information," Working Papers 11-05, NET Institute, revised Sep 2011.
- Caillaud, Bernard & Jullien, Bruno, 2003. " Chicken & Egg: Competition among Intermediation Service Providers," RAND Journal of Economics, The RAND Corporation, vol. 34(2), pages 309-28, Summer.
- Andrei Hagiu, 2006. "Pricing and Commitment by Two-Sided Platforms," RAND Journal of Economics, The RAND Corporation, vol. 37(3), pages 720-737, Autumn.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Nicholas Economides).
If references are entirely missing, you can add them using this form.