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Spatial competition among multiple platforms

Author

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  • Toshiki Kodera

    () (Graduate School of Economics, Nagoya University)

Abstract

We study spatial competition in two-sided markets, in which platforms engage in price competition in a circular city. After analyzing the pricing and profits of the unique symmetric equilibrium for a given number of platforms, we derive the number of platforms under free entry and compare it with the social optimum. We consider the case with or without a price restriction. In contrast to the excess entry result in Salop's (1979) model, the number of platforms is smaller than the social optimum if a minimum price binds, and if cross-group network effects are sufficiently large for a group of agents.

Suggested Citation

  • Toshiki Kodera, 2010. "Spatial competition among multiple platforms," Economics Bulletin, AccessEcon, vol. 30(2), pages 1516-1525.
  • Handle: RePEc:ebl:ecbull:eb-09-00511
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    File URL: http://www.accessecon.com/Pubs/EB/2010/Volume30/EB-10-V30-I2-P139.pdf
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    References listed on IDEAS

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    1. repec:ebl:ecbull:v:3:y:2007:i:7:p:1-14 is not listed on IDEAS
    2. Dutta, Bhaskar & Ghosal, Sayantan & Ray, Debraj, 2005. "Farsighted network formation," Journal of Economic Theory, Elsevier, pages 143-164.
    3. Sanjeev Goyal & Sumit Joshi, 2006. "Bilateralism And Free Trade," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 47(3), pages 749-778, August.
    4. Jackson, Matthew O. & Wolinsky, Asher, 1996. "A Strategic Model of Social and Economic Networks," Journal of Economic Theory, Elsevier, vol. 71(1), pages 44-74, October.
    5. Paul Belleflamme & Francis Bloch, 2004. "Market sharing agreements and collusive networks," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 45(2), pages 387-411, May.
    6. Jackson, Matthew O. & Watts, Alison, 2002. "The Evolution of Social and Economic Networks," Journal of Economic Theory, Elsevier, vol. 106(2), pages 265-295, October.
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    Cited by:

    1. Wenjiao Che & Toshiki Kodera, 2014. "Product differentiation and advertising in multiple markets," Economics Bulletin, AccessEcon, vol. 34(1), pages 400-408.

    More about this item

    JEL classification:

    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance

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