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Monopolistic Location Choice in Two-Sided Industries

Author

Listed:
  • Böhme, Enrico
  • Müller, Christopher

Abstract

We analyze the optimal location choice of a monopolistic firm that operates two platforms on a two-sided market. We show that the optimal platform locations are equivalent to the one-sided benchmark if both sides are either restricted to single- or multi-homing. In the mixed case (one side single-homes, the other one multi-homes), the optimal platform locations are determined by the relative profitability of both market sides. Our results indicate that modeling mergers on two-sided markets with fixed locations is often inappropriate.

Suggested Citation

  • Böhme, Enrico & Müller, Christopher, 2012. "Monopolistic Location Choice in Two-Sided Industries," MPRA Paper 41761, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:41761
    as

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    File URL: https://mpra.ub.uni-muenchen.de/41761/2/MPRA_paper_41761.pdf
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    References listed on IDEAS

    as
    1. Jean-Charles Rochet & Jean Tirole, 2014. "Platform Competition in Two-Sided Markets," CPI Journal, Competition Policy International, vol. 10.
    2. repec:cor:louvrp:-1202 is not listed on IDEAS
    3. Pierre Hanjoul & Pierre Hansen & Dominique Peeters & Jacques-Francois Thisse, 1990. "Uncapacitated Plant Location Under Alternative Spatial Price Policies," Management Science, INFORMS, vol. 36(1), pages 41-57, January.
    4. Ambarish Chandra & Allan Collard-Wexler, 2009. "Mergers in Two-Sided Markets: An Application to the Canadian Newspaper Industry," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 18(4), pages 1045-1070, December.
    5. Simon P. Anderson & Stephen Coate, 2005. "Market Provision of Broadcasting: A Welfare Analysis," Review of Economic Studies, Oxford University Press, vol. 72(4), pages 947-972.
    6. repec:rje:randje:v:37:y:2006:3:p:645-667 is not listed on IDEAS
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    two-sided markets; location choice; monopoly; merger simulation;

    JEL classification:

    • K20 - Law and Economics - - Regulation and Business Law - - - General
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
    • L12 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Monopoly; Monopolization Strategies
    • D42 - Microeconomics - - Market Structure, Pricing, and Design - - - Monopoly

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