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The competitive landscape of online platforms

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Abstract

This paper describes the different forces that shape the market structure of four different 'online platform ecosystems' and the competition between them. The paper focuses on the following categories of platforms, which represent a wide scope of online activities: (i) e-commerce marketplaces; (ii) app stores; (iii) social media; and (iv) online advertising platforms. A central concern is to provide descriptive, empirical evidence on the relative strength of the forces operating in each case. In the past decade or so, many theoretical and conceptual contributions have been very helpful in developing a clear understanding of many of the issues around multi-sided markets, and have analysed these activities from many different perspectives. Unfortunately, they have provided hardly any empirical evidence. This paper attempts to reduce the lack of empirical evidence available on online platforms.

Suggested Citation

  • Nestor Duch-Brown, 2017. "The competitive landscape of online platforms," JRC Working Papers on Digital Economy 2017-04, Joint Research Centre (Seville site).
  • Handle: RePEc:ipt:decwpa:2017-04
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    File URL: https://ec.europa.eu/jrc/sites/jrcsh/files/jrc106299.pdf
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    References listed on IDEAS

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    1. Nestor Duch-Brown & Lukasz Grzybowski & Frank Verboven, 2015. "The Impact of Online Sales on Consumers and Firms: Evidence from Household Appliances," JRC Working Papers on Digital Economy 2015-15, Joint Research Centre (Seville site).
    2. Gary S. Becker & Kevin M. Murphy, 1993. "A Simple Theory of Advertising as a Good or Bad," The Quarterly Journal of Economics, Oxford University Press, vol. 108(4), pages 941-964.
    3. Mark Armstrong, 2006. "Competition in two‐sided markets," RAND Journal of Economics, RAND Corporation, vol. 37(3), pages 668-691, September.
    4. Jean‐Charles Rochet & Jean Tirole, 2006. "Two‐sided markets: a progress report," RAND Journal of Economics, RAND Corporation, vol. 37(3), pages 645-667, September.
    5. Jean-Charles Rochet & Jean Tirole, 2014. "Platform Competition in Two-Sided Markets," CPI Journal, Competition Policy International, vol. 10.
    6. Krugman, Paul, 1980. "Scale Economies, Product Differentiation, and the Pattern of Trade," American Economic Review, American Economic Association, vol. 70(5), pages 950-959, December.
    7. Anthony Dukes & Lin Liu, 2016. "Online Shopping Intermediaries: The Strategic Design of Search Environments," Management Science, INFORMS, vol. 62(4), pages 1064-1077, April.
    8. Geoffrey G. Parker & Marshall W. Van Alstyne, 2005. "Two-Sided Network Effects: A Theory of Information Product Design," Management Science, INFORMS, vol. 51(10), pages 1494-1504, October.
    9. Justus Haucap & Ulrich Heimeshoff, 2014. "Google, Facebook, Amazon, eBay: Is the Internet driving competition or market monopolization?," International Economics and Economic Policy, Springer, vol. 11(1), pages 49-61, February.
    10. Mark Armstrong & Julian Wright, 2007. "Two-sided Markets, Competitive Bottlenecks and Exclusive Contracts," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 32(2), pages 353-380, August.
    11. Cristiano Codagnone & Bertin Martens, 2016. "Scoping the Sharing Economy: Origins, Definitions, Impact and Regulatory Issues," JRC Working Papers on Digital Economy 2016-01, Joint Research Centre (Seville site).
    12. Wright Julian, 2004. "One-sided Logic in Two-sided Markets," Review of Network Economics, De Gruyter, vol. 3(1), pages 1-21, March.
    13. Bagwell, Kyle, 2007. "The Economic Analysis of Advertising," Handbook of Industrial Organization, in: Mark Armstrong & Robert Porter (ed.), Handbook of Industrial Organization, edition 1, volume 3, chapter 28, pages 1701-1844, Elsevier.
    14. Nestor Duch-Brown & Bertin Martens & Frank Mueller-Langer, 2017. "The economics of ownership, access and trade in digital data," JRC Working Papers on Digital Economy 2017-01, Joint Research Centre (Seville site).
    15. Doganoglu, Toker & Wright, Julian, 2010. "Exclusive dealing with network effects," International Journal of Industrial Organization, Elsevier, vol. 28(2), pages 145-154, March.
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    Cited by:

    1. Nestor Duch-Brown, 2017. "Quality discrimination in online multi-sided markets," JRC Working Papers on Digital Economy 2017-06, Joint Research Centre (Seville site).

    More about this item

    Keywords

    digital single market; data economy; online platforms; multi-sided markets;

    JEL classification:

    • D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
    • K11 - Law and Economics - - Basic Areas of Law - - - Property Law
    • K12 - Law and Economics - - Basic Areas of Law - - - Contract Law
    • L86 - Industrial Organization - - Industry Studies: Services - - - Information and Internet Services; Computer Software

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