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Horizontal mergers between multisided platforms: Insights from Cournot competition

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  • Joao Correia‐da‐Silva
  • Bruno Jullien
  • Yassine Lefouili
  • Joana Pinho

Abstract

This paper discusses the literature on horizontal mergers between multisided platforms and argues that the Cournot model can provide useful insights into the welfare effects of such mergers. To illustrate those insights, we develop a simple model in which two‐sided platforms offer a homogeneous service and compete à la Cournot, and derive the effects of “average‐marginal‐cost‐preserving” mergers on consumers on both sides of the market. We conclude with a discussion of several research avenues that could be explored to understand better the impact of horizontal mergers between multisided platforms.

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  • Joao Correia‐da‐Silva & Bruno Jullien & Yassine Lefouili & Joana Pinho, 2019. "Horizontal mergers between multisided platforms: Insights from Cournot competition," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 28(1), pages 109-124, January.
    • Handle: RePEc:bla:jemstr:v:28:y:2019:i:1:p:109-124
    DOI: 10.1111/jems.12309
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    3. Tremblay, Mark J. & Adachi, Takanori & Sato, Susumu, 2023. "Cournot platform competition with mixed-homing," International Journal of Industrial Organization, Elsevier, vol. 91(C).
    4. Jullien, Bruno & Sand-Zantman, Wilfried, 2021. "The Economics of Platforms: A Theory Guide for Competition Policy," Information Economics and Policy, Elsevier, vol. 54(C).
    5. Takanori Adachi & Susumu Sato & Mark J. Tremblay, 2023. "Platform Oligopoly with Endogenous Homing: Implications for Mergers and Free Entry," Journal of Industrial Economics, Wiley Blackwell, vol. 71(4), pages 1203-1232, December.
    6. Katz, Michael L., 2021. "Big Tech mergers: Innovation, competition for the market, and the acquisition of emerging competitors," Information Economics and Policy, Elsevier, vol. 54(C).
    7. Belleflamme, Paul & Johnen, Johannes, 2023. "Non-Price Strategies of Marketplaces: A Survey," LIDAM Discussion Papers CORE 2023015, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    8. Martin Peitz, 2023. "Governance and Regulation of Platforms," CRC TR 224 Discussion Paper Series crctr224_2023_480, University of Bonn and University of Mannheim, Germany.
    9. Bruno Jullien & Alessandro Pavan & Marc Rysman, 2021. "Two-sided markets, pricing, and network effects," Post-Print hal-03828345, HAL.
    10. Mikhail Klimenko & Jingwen Qu, 2023. "Global digital platforms, technology transfer and foreign direct investment policies in two‐sided markets," Economic Inquiry, Western Economic Association International, vol. 61(3), pages 584-604, July.
    11. Paolo Bertoletti, 2022. "A Preference-Based Model of Platform Competition," Working Papers 486, University of Milano-Bicocca, Department of Economics.
    12. Juan Manuel Sanchez‐Cartas & Gonzalo León, 2021. "Multisided Platforms And Markets: A Survey Of The Theoretical Literature," Journal of Economic Surveys, Wiley Blackwell, vol. 35(2), pages 452-487, April.
    13. Rafael Jimenez-Duran, 2021. "The Economics of Content Moderation: Theory and Experimental Evidence from Hate Speech on Twitter," Natural Field Experiments 00754, The Field Experiments Website.
    14. Jiménez-Durán, Rafael, 2022. "The economics of content moderation: Theory and experimental evidence from hate speech on Twitter," Working Papers 324, The University of Chicago Booth School of Business, George J. Stigler Center for the Study of the Economy and the State.
    15. Liu, He & Li, Xuerong & Wang, Shouyang, 2021. "A bibliometric analysis of 30 years of platform research: Developing the research agenda for platforms, the associated technologies and social impacts," Technological Forecasting and Social Change, Elsevier, vol. 169(C).
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    JEL classification:

    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • L41 - Industrial Organization - - Antitrust Issues and Policies - - - Monopolization; Horizontal Anticompetitive Practices

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