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Price Competition between Platforms: The Case of eBay vs. Yahoo! Auctions

In: THE ANALYSIS OF COMPETITION POLICY AND SECTORAL REGULATION

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  • Stefan Behringer

Abstract

We investigate the equilibrium market structure on competing online auction sites such as those of eBay or Yahoo! Building on the model of Ellison et al. (2004), we take full account of the complexity of network effects on such platforms. We extend the model by looking at the implication of exogenous and endogenous buyer and seller charges making use of contingent tariffs. This extension brings in line the theory with the empirical findings of Brown and Morgan (2009) that eBay sellers enjoy higher prices and more favorable buyer–seller ratios than Yahoo! sellers. We also investigate welfare effects and look at the viability of duopoly with size differentials, at large markets, and at implications for policy.

Suggested Citation

  • Stefan Behringer, 2014. "Price Competition between Platforms: The Case of eBay vs. Yahoo! Auctions," World Scientific Book Chapters, in: Martin Peitz & Yossi Spiegel (ed.), THE ANALYSIS OF COMPETITION POLICY AND SECTORAL REGULATION, chapter 6, pages 141-172, World Scientific Publishing Co. Pte. Ltd..
    • Handle: RePEc:wsi:wschap:9789814616362_0006
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