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Platforms and network effects

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  • Belleflamme, Paul
  • Peitz, Martin

Abstract

In many markets, user benefits depend on participation and usage decisions of other users giving rise to network effects. Intermediaries manage these network effects and thus act as platforms that bring users together. This paper reviews key findings from the literature on network effects and two-sided platforms. It lays out the basic models of monopoly platforms and platform competition, and elaborates on some routes taken by recent research.

Suggested Citation

  • Belleflamme, Paul & Peitz, Martin, 2016. "Platforms and network effects," Working Papers 16-14, University of Mannheim, Department of Economics.
    • Handle: RePEc:mnh:wpaper:41306
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    References listed on IDEAS

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    2. Oriol, Nathalie & Rufini, Alexandra & Torre, Dominique, 2018. "Fifty-shades of grey: Competition between dark and lit pools in stock exchanges," Information Economics and Policy, Elsevier, vol. 45(C), pages 68-85.
    3. Krämer, Jan & Peitz, Martin, 2018. "A fresh look at zero-rating," Telecommunications Policy, Elsevier, vol. 42(7), pages 501-513.
    4. Hildebrandt, Christian & Arnold, René, 2018. "Marktbeobachtung in der digitalen Wirtschaft – Ein Modell zur Analyse von Online-Plattformen," WIK Discussion Papers 427, WIK Wissenschaftliches Institut für Infrastruktur und Kommunikationsdienste GmbH.
    5. Kroon, Peter & Arnold, René, 2018. "Die Bedeutung von Interoperabilität in der digitalen Welt – Neue Herausforderungen in der interpersonellen Kommunikation," WIK Discussion Papers 437, WIK Wissenschaftliches Institut für Infrastruktur und Kommunikationsdienste GmbH.
    6. Stephen Jarman & Deniz D. Karaman Örsal, 2020. "The regulation of zero-price markets by the competition authorities in the USA and the EU," Competition and Regulation in Network Industries, , vol. 21(4), pages 315-343, December.
    7. Arnold, René & Schneider, Anna & Lennartz, Jonathan, 2020. "Interoperability of interpersonal communications services – A consumer perspective," Telecommunications Policy, Elsevier, vol. 44(3).

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    More about this item

    Keywords

    Network effects ; digital platforms ; two-sided markets ; tipping ; platform competition ; intermediation ; pricing ; imperfect competition;
    All these keywords.

    JEL classification:

    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L86 - Industrial Organization - - Industry Studies: Services - - - Information and Internet Services; Computer Software

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