Nonparametric Analysis of Two-Sided Markets
This paper considers an empirical semiparametric model for two-sided markets. Contrary to existing empirical literature on two-sided markets, we do not rely on linear network effects. Instead, network effects and probability distribution functions of net benefits of two sides are specified nonparametrically. The demand functions and the network effect functions of readers and advertisers are estimated by nonparametric IV estimation using a data set from German magazine industry. The ill-posed inverse problem faced during the estimation is solved by Tikhonov Regularization. We show that semiparametric specification is supported by the data and the network effects on readers' side are neither linear nor monotonic. With a numerical illustration we demonstrate that the mark-up of the magazine on readers' side is 27% higher with the nonlinearly specified network effects than in the case with linear network effects.
|Date of creation:||Oct 2012|
|Date of revision:|
|Contact details of provider:|| Postal: 8 Woodland Road, Bristol, BS8 1TN|
Phone: 0117 928 8415
Fax: 0117 928 8577
Web page: http://www.efm.bris.ac.uk/
More information through EDIRC
References listed on IDEAS
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.:
- Flachaire, Emmanuel, 2005.
"Bootstrapping heteroskedastic regression models: wild bootstrap vs. pairs bootstrap,"
Computational Statistics & Data Analysis,
Elsevier, vol. 49(2), pages 361-376, April.
- Emmanuel Flachaire, 2005. "Bootstrapping heteroskedastic regression models: wild bootstrap vs. pairs bootstrap," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-00175910, HAL.
- Jean-Charles Rochet & Jean Triole, 2002.
"Platform competition in two sided markets,"
LSE Research Online Documents on Economics
24929, London School of Economics and Political Science, LSE Library.
- 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, 06.
- Jean-Charles Rochet & Jean Tirole, 2014. "Platform Competition in Two-Sided Markets," CPI Journal, Competition Policy International, vol. 10.
- Jean-Charles Rochet & Jean Triole, 2002. "Platform Competition in Two Sided Markets," FMG Discussion Papers dp409, Financial Markets Group.
- Rochet, Jean-Charles & Tirole, Jean, 2003. "Platform Competition in Two-Sided Markets," IDEI Working Papers 152, Institut d'Économie Industrielle (IDEI), Toulouse.
- Argentesi, Elena & Ivaldi, Marc, 2005. "Market Definition in the Printed Media Industry: Theory and Practice," CEPR Discussion Papers 5096, C.E.P.R. Discussion Papers.
- Fève, Frédérique & Florens, Jean-Pierre, 2009.
"The Practice of Non Parametric Estimation by Solving Inverse Problems: The Example of Transformation Models,"
TSE Working Papers
10-169, Toulouse School of Economics (TSE).
- Frédérique Fève & Jean-Pierre Florens, 2010. "The practice of non-parametric estimation by solving inverse problems: the example of transformation models," Econometrics Journal, Royal Economic Society, vol. 13(3), pages S1-S27, October.
- Fève, Frédérique & Florens, Jean-Pierre, 2009. "The Practice of Non Parametric Estimation by Solving Inverse Problems: The Example of Transformation Models," IDEI Working Papers 615, Institut d'Économie Industrielle (IDEI), Toulouse.
- Victor Chernozhukov & Patrick Gagliardini & Olivier Scaillet, 2006. "Nonparametric Instrumental Variable Estimators of Structural Quantile Effects," Swiss Finance Institute Research Paper Series 08-03, Swiss Finance Institute, revised Aug 2009.
- Kaiser, Ulrich & Song, Minjae, 2009. "Do media consumers really dislike advertising? An empirical assessment of the role of advertising in print media markets," International Journal of Industrial Organization, Elsevier, vol. 27(2), pages 292-301, March.
- Elena Argentesi & Lapo Filistrucchi, 2005.
"Estimating market power in a two-sided market: the case of newspapers,"
Economics Working Papers
ECO2005/07, European University Institute.
- Elena Argentesi & Lapo Filistrucchi, 2007. "Estimating market power in a two-sided market: The case of newspapers," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 22(7), pages 1247-1266.
- Victor Chernozhukov & Ivan Fernandez-Val & Alfred Galichon, 2008.
"Improving point and interval estimates of monotone functions by rearrangement,"
CeMMAP working papers
CWP17/08, Centre for Microdata Methods and Practice, Institute for Fiscal Studies.
- V. Chernozhukov & I. Fernández-Val & A. Galichon, 2009. "Improving point and interval estimators of monotone functions by rearrangement," Biometrika, Biometrika Trust, vol. 96(3), pages 559-575.
- D’Haultfoeuille, Xavier, 2011.
"On The Completeness Condition In Nonparametric Instrumental Problems,"
Cambridge University Press, vol. 27(03), pages 460-471, June.
- Xavier d'Haultfoeuille, 2006. "On the Completeness Condition in Nonparametric Instrumental Problems," Working Papers 2006-32, Centre de Recherche en Economie et Statistique.
- Stefan Behringer & Lapo Filistrucchi, 2009. "Price Wars in Two-Sided Markets: The case of the UK Quality Newspapers," Working Papers 09-26, NET Institute, revised Dec 2009.
- Senay Sokullu, 2012. "Nonparametric Estimation of Semiparametric Transformation Models," Bristol Economics Discussion Papers 12/625, Department of Economics, University of Bristol, UK.
- Whitney K. Newey & James L. Powell, 2003. "Instrumental Variable Estimation of Nonparametric Models," Econometrica, Econometric Society, vol. 71(5), pages 1565-1578, 09.
- Jean Tirole, 1988. "The Theory of Industrial Organization," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262200716.
- Richard Blundell & Xiaohong Chen & Dennis Kristensen, 2003. "Nonparametric IV estimation of shape-invariant Engel curves," CeMMAP working papers CWP15/03, Centre for Microdata Methods and Practice, Institute for Fiscal Studies.
When requesting a correction, please mention this item's handle: RePEc:bri:uobdis:12/628. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Jonathan Temple)
If references are entirely missing, you can add them using this form.