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Two-sided platforms with endogenous quality differentiation

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  • Viecens, María Fernanda

Abstract

In this paper we construct a simple model of platform price competition with two main novel features. First, platforms endogenously decide the quality of their 'access service' and second, each group exhibits preferences not only about the number of agents in the opposite group, but also about their type or quality. Additionally, sellers also care about the type of agents in their own group. Our interest is to examine the set of conditions under which, in spite of the network externalities, more than one plaftorm coexist in equilibrium. We show that when quality is endogenously determined by the choices of agents these platforms could be asymmetric.

Suggested Citation

  • Viecens, María Fernanda, 2006. "Two-sided platforms with endogenous quality differentiation," UC3M Working papers. Economics we061204, Universidad Carlos III de Madrid. Departamento de Economía.
    • Handle: RePEc:cte:werepe:we061204
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    Cited by:

    1. Belleflamme, Paul & Peitz, Martin & Toulemonde, Eric, 2022. "The tension between market shares and profit under platform competition," International Journal of Industrial Organization, Elsevier, vol. 81(C).
    2. Soo Jin Kim & Pallavi Pal, 2021. "Quality Differentiation and Optimal Pricing Strategy in Multi-Sided Markets," CESifo Working Paper Series 9267, CESifo.
    3. Nestor Duch-Brown, 2017. "Quality discrimination in online multi-sided markets," JRC Working Papers on Digital Economy 2017-06, Joint Research Centre.
    4. Doan, Thanh & Manenti, Fabio M. & Mariuzzo, Franco, 2023. "Platform competition in the tablet PC market: The effect of application quality," International Journal of Industrial Organization, Elsevier, vol. 88(C).

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