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Market Definition of Platform Markets

Author

Listed:
  • Dewenter, Ralf

    () (Helmut Schmidt University, Hamburg)

  • Heimeshoff, Ulrich

    () (Düsseldorf Institute for Competition Economics)

  • Löw, Franziska

    () (Helmut Schmidt University, Hamburg)

Abstract

Platform markets are characterized by the existence of indirect network effects that connect two or more market sides through a platform that internalizes these feedback effects. Conventional instruments of market definitions which consider price levels cannot easily applied in case of two-sided platform competition, as price structure of those markets are non-neutral. Instead of using prices, we use time series of quantities and simple correlation analysis to evaluate the substitutional relationship within two-sided media markets. As a benchmark model, we simulate a Cournot duopoly on order to calculate correlation coefficients for varying degrees of product differentiation and indirect network effects.

Suggested Citation

  • Dewenter, Ralf & Heimeshoff, Ulrich & Löw, Franziska, 2017. "Market Definition of Platform Markets," Working Paper 176/2017, Helmut Schmidt University, Hamburg.
  • Handle: RePEc:ris:vhsuwp:2017_176
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    Keywords

    two-sided markets; market definition; printed media; network effects;

    JEL classification:

    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • L40 - Industrial Organization - - Antitrust Issues and Policies - - - General
    • L82 - Industrial Organization - - Industry Studies: Services - - - Entertainment; Media

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