Competition in two-sided markets with common network externalities
We study competition in two sided markets with common network externality rather than with the standard inter-group e¤ects. This type of externality occurs when both groups bene�t, possibly with di¤erent intensities, from an increase in the size of one group and from a decrease in the size of the other. We explain why common externalityis relevant for the health and education sectors. We focus on the symmetric equilibrium and show that when the externality itself satis�es an homogeneity condition then platforms� pro�ts and price structure have some speci�c properties. Our results reveal how the rents coming from network externalities are shifted by platforms from one side to other, according to the homogeneity degree. In the speci�c but realistic case where the common network externality is homogeneous of degree zero, platform�s pro�t do not depend on the intensity of the (common) network externality. This is in sharp contrast to conventional results stating that the presence of network externalities in a two-sided market structure increases the intensity of competition when the externality is positive (and decreases it when the externality is negative). Prices are a¤ected but in such a way that platforms only transfer rents from consumers to providers
|Date of creation:||15 Oct 2009|
|Date of revision:|
|Contact details of provider:|| |
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.:
- BELLEFLAMME, Paul & TOULEMONDE, Eric, 2007.
"Negative intra-group externalities in two-sided markets,"
CORE Discussion Papers
2007039, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- Paul Belleflamme & Eric Toulemonde, 2009. "Negative Intra-Group Externalities In Two-Sided Markets," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 50(1), pages 245-272, 02.
- BELLEFLAMME, Paul & TOULEMONDE, Eric, . "Negative intra-group externalities in two-sided markets," CORE Discussion Papers RP 2119, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- Paul Belleflamme & Eric Toulemonde, 2007. "Negative Intra-Group Externalities in Two-Sided Markets," CESifo Working Paper Series 2011, CESifo Group Munich.
- Alan B. Krueger, 2000.
"Economic Considerations and class size,"
975, Princeton University, Woodrow Wilson School of Public and International Affairs, Center for Research on Child Wellbeing..
- Troy Quast & David E. M. Sappington & Elizabeth Shenkman, 2008. "Does the quality of care in Medicaid MCOs vary with the form of physician compensation?," Health Economics, John Wiley & Sons, Ltd., vol. 17(4), pages 545-550.
- Ching-to Albert Ma, 1994.
"Health Care Payment Systems: Cost and Quality Incentives,"
0047, Boston University - Industry Studies Programme.
- Ma, Ching-to Albert, 1994. "Health Care Payment Systems: Cost and Quality Incentives," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 3(1), pages 93-112, Spring.
- Bernard Fortin & Nicolas Jacquemet & Bruce Shearer, 2008.
"Policy Analysis in the health-services market: accounting for quality and quantity,"
Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers)
- Bernard Fortin & Nicolas Jacquemet & Bruce Shearer, 2008. "Policy Analysis in the Health-Services Market: Accounting for Quality and Quantity," Cahiers de recherche 0807, CIRPEE.
- repec:rje:randje:v:37:y:2006:3:p:668-691 is not listed on IDEAS
- repec:adr:anecst:y:2008:i:91-92:p:14 is not listed on IDEAS
- David Card & Alan Krueger, 1990.
"Does School Quality Matter? Returns to Education and the Characteristics of Public Schools in the United States,"
NBER Working Papers
3358, National Bureau of Economic Research, Inc.
- Card, David & Krueger, Alan B, 1992. "Does School Quality Matter? Returns to Education and the Characteristics of Public Schools in the United States," Journal of Political Economy, University of Chicago Press, vol. 100(1), pages 1-40, February.
- David Card & Alan Krueger, 1990. "Does School Quality Matter? Returns to Education and the Characteristics of Public Schools in the United States," Working Papers 645, Princeton University, Department of Economics, Industrial Relations Section..
- David Bardey & Jean-Charles Rochet, 2010.
"Competition Among Health Plans: A Two-Sided Market Approach,"
Journal of Economics & Management Strategy,
Wiley Blackwell, vol. 19(2), pages 435-451, 06.
- David Bardey & Jean-Charles Rochet, 2009. "Competition among health plans: a two-sided market approach," DOCUMENTOS DE TRABAJO 005217, UNIVERSIDAD DEL ROSARIO.
- repec:hal:journl:halshs-00305309 is not listed on IDEAS
- repec:rje:randje:v:37:y:2006:3:p:645-667 is not listed on IDEAS
- Mark Armstrong, 2005.
"Competition in Two-Sided Markets,"
- Gaynor, Martin & Pauly, Mark V, 1990. "Compensation and Productive Efficiency of Partnerships: Evidence from Medical Group Practice," Journal of Political Economy, University of Chicago Press, vol. 98(3), pages 544-73, June.
- 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.
- Rochet, Jean-Charles & Tirole, Jean, 2003. "Platform Competition in Two-Sided Markets," IDEI Working Papers 152, Institut d'Économie Industrielle (IDEI), Toulouse.
- Jean-Charles Rochet & Jean Triole, 2002. "Platform Competition in Two Sided Markets," FMG Discussion Papers dp409, Financial Markets Group.
- Wright Julian, 2004. "One-sided Logic in Two-sided Markets," Review of Network Economics, De Gruyter, vol. 3(1), pages 1-21, March.
- Joshua D. Angrist & Victor Lavy, 1999. "Using Maimonides' Rule to Estimate the Effect of Class Size on Scholastic Achievement," The Quarterly Journal of Economics, Oxford University Press, vol. 114(2), pages 533-575.
- Kurucu, Gokce, 2007. "Negative Network Externalities in Two-Sided Markets: A Competition Approach," MPRA Paper 9746, University Library of Munich, Germany.
When requesting a correction, please mention this item's handle: RePEc:col:000092:005937. 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: (Facultad de Economía)
If references are entirely missing, you can add them using this form.