The Role of Coordination Bias in Platform Competition
This paper considers platform competition in a two-sided market that includes buyers and sellers. One of the platforms benefits from a favorable coordination bias in the market, in that the two sides are more likely to join the advantaged platform. We find that the degree of the coordination bias affects the platform's decision regarding the business model (i.e., whether to subsidize buyers or sellers), the access fees and the size of the platform. A slight increase in the coordination bias may induce the advantaged platform to switch from subsidizing sellers to subsidizing buyers, or induce the disadvantaged platform to switch from subsidizing buyers to subsidizing sellers. Moreover, in the former case the advantaged platform switches from oversupplying to undersupplying sellers, while in the latter case the disadvantaged platform switches from undersupplying to oversupplying sellers.
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.:
- Hanna Halaburda & Yaron Yehezkel, 2011.
"Platform Competition under Asymmetric Information,"
11-05, NET Institute, revised Sep 2011.
- Claussen, Jörg & Kretschmer, Tobias & Mayrhofer, Philip, 2010.
"Incentives for Quality over Time – The Case of Facebook Applications,"
Discussion Papers in Business Administration
12500, University of Munich, Munich School of Management.
- Jörg Claussen & Tobias Kretschmer & Philip Mayrhofer, 2012. "Incentives for Quality over Time - The Case of Facebook Applications," CEP Discussion Papers dp1133, Centre for Economic Performance, LSE.
- Ángel L. López & Patrick Rey, 2009.
"Foreclosing Competition through Access Charges and Price Discrimination,"
2009.99, Fondazione Eni Enrico Mattei.
- Lopez, Angel & Rey, Patrick, 2009. "Foreclosing Competition through Access Charges and Price Discrimination," TSE Working Papers 09-056, Toulouse School of Economics (TSE), revised Feb 2012.
- Lopez, Angel L. & Rey, Patrick, 2009. "Foreclosing competition through access charges and price discrimination," IESE Research Papers D/801, IESE Business School.
- Lopez, Angel & Rey, Patrick, 2009. "Foreclosing Competition through Access Charges and Price Discrimination," IDEI Working Papers 570, Institut d'Économie Industrielle (IDEI), Toulouse, revised Feb 2012.
- repec:rje:randje:v:37:y:2006:3:p:720-737 is not listed on IDEAS
- Caillaud, Bernard & Jullien, Bruno, 2003. " Chicken & Egg: Competition among Intermediation Service Providers," RAND Journal of Economics, The RAND Corporation, vol. 34(2), pages 309-28, Summer.
When requesting a correction, please mention this item's handle: RePEc:net:wpaper:1203. 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: (Nicholas Economides)
If references are entirely missing, you can add them using this form.