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Platforms as arbitrageurs and facilitators of arbitrage- a simple analysis

Author

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  • Waterson, Michael

    (University of Warwick)

Abstract

This paper analyses the consumer impacts of arbitrage focusing on the significant role of internet platforms as monopolistic arbitrageurs between essentially competitive sub-markets that have not been previously linked. As arbitrageurs, there is the potential for them to create consumer benefit, but for a series of reasons, we show that consumer welfare may not be enhanced and that particular sections of the community may be disadvantaged by their actions.

Suggested Citation

  • Waterson, Michael, 2023. "Platforms as arbitrageurs and facilitators of arbitrage- a simple analysis," The Warwick Economics Research Paper Series (TWERPS) 1481, University of Warwick, Department of Economics.
    • Handle: RePEc:wrk:warwec:1481
    as

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    File URL: https://warwick.ac.uk/fac/soc/economics/research/workingpapers/2023/twerp_1481_-_waterson.pdf
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    References listed on IDEAS

    as
    1. Phillip Leslie & Alan Sorensen, 2014. "Resale and Rent-Seeking: An Application to Ticket Markets," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 81(1), pages 266-300.
    2. Jean-Charles Rochet & Jean Tirole, 2003. "Platform Competition in Two-Sided Markets," Journal of the European Economic Association, MIT Press, vol. 1(4), pages 990-1029, June.
    3. David Ronayne, 2021. "Price Comparison Websites," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 62(3), pages 1081-1110, August.
    4. Schmalensee, Richard, 1981. "Output and Welfare Implications of Monopolistic Third-Degree Price Discrimination," American Economic Review, American Economic Association, vol. 71(1), pages 242-247, March.
    5. Simon Cowan, 2012. "Third-Degree Price Discrimination and Consumer Surplus," Journal of Industrial Economics, Wiley Blackwell, vol. 60(2), pages 333-345, June.
    6. Poitras, Geoffrey, 2021. "Origins of arbitrage," Financial History Review, Cambridge University Press, vol. 28(1), pages 96-123, April.
    7. von der Fehr, Nils-Henrik Morch & Harbord, David, 1993. "Spot Market Competition in the UK Electricity Industry," Economic Journal, Royal Economic Society, vol. 103(418), pages 531-546, May.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Arbitrage ; Consumer welfare ; Platforms ; Two-sided markets JEL Codes: D51 ; L81 ; L86 ; D47 ; F11;
    All these keywords.

    JEL classification:

    • D51 - Microeconomics - - General Equilibrium and Disequilibrium - - - Exchange and Production Economies
    • L81 - Industrial Organization - - Industry Studies: Services - - - Retail and Wholesale Trade; e-Commerce
    • L86 - Industrial Organization - - Industry Studies: Services - - - Information and Internet Services; Computer Software
    • D47 - Microeconomics - - Market Structure, Pricing, and Design - - - Market Design
    • F11 - International Economics - - Trade - - - Neoclassical Models of Trade

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