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Platform Ownership

Listed author(s):
  • Volker Nocke

    ()

    (Department of Economics, University of Pennsylvania)

  • Martin Peitz

    ()

    (Department of Economics, University of Mannheim)

  • Konrad Stahl

    ()

    (Department of Economics, University of Mannheim)

We develop a general theoretical framework of trade on a platform on which buyers and sellers interact. The platform may be owned by a single large, or many small independent or vertically integrated intermediaries. We provide a positive and normative analysis of the impact of platform ownership structure on platform size. The strength of network effects is important in the ranking of ownership structures by induced platform size and welfare. While vertical integration may be welfare-enhancing if network effects are weak, monopoly platform ownership is socially preferred if they are strong. These are also the ownership structures likely to emerge.

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File URL: http://economics.sas.upenn.edu/system/files/working-papers/04-029.pdf
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Paper provided by Penn Institute for Economic Research, Department of Economics, University of Pennsylvania in its series PIER Working Paper Archive with number 04-029.

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Length: 29 pages
Date of creation: 21 Jul 2004
Handle: RePEc:pen:papers:04-029
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