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Partial Multihoming in Two-sided Markets


  • Rattanasuda Poolsombat
  • Gianluigi Vernasca


In this paper we explore the possibility of "partial-multihoming" in a two-sided market where a subset of agents, on one or both side(s), may multihome in equilibrium. We consider a model in which platforms are spatially differentiated and on each side of the market there are two type of agents, low type and high type agents, that differ only by their preferences over the network benefits. We derive under which conditions of network preferences, an equilibrium with partial multihoming on both sides exists. We show that for such an equilibrium to exist, the network benefits of high type agents must be sufficiently higher than transportation costs. Furthermore, the proportions of agents who multihome on both sides must be sufficiently small. Finally, we show that independently of the degree of multihoming on the other side of the market, agents in each group face higher prices when there is partial multihoming on their side than when there is singlehoming.

Suggested Citation

  • Rattanasuda Poolsombat & Gianluigi Vernasca, 2006. "Partial Multihoming in Two-sided Markets," Discussion Papers 06/10, Department of Economics, University of York.
  • Handle: RePEc:yor:yorken:06/10

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    References listed on IDEAS

    1. Gabszewicz, Jean J. & Laussel, Dider & Sonnac, Nathalie, 2001. "Press advertising and the ascent of the 'Pensee Unique'," European Economic Review, Elsevier, vol. 45(4-6), pages 641-651, May.
    2. Jean-Charles Rochet & Jean Tirole, 2014. "Platform Competition in Two-Sided Markets," CPI Journal, Competition Policy International, vol. 10.
    3. Doganoglu, Toker & Wright, Julian, 2006. "Multihoming and compatibility," International Journal of Industrial Organization, Elsevier, vol. 24(1), pages 45-67, January.
    4. Mark McCabe & Christopher Snyder, 2004. "The Economics of Open-Access Journals," Working Papers 04-18, NET Institute, revised Nov 2004.
    5. GABSZEWICZ, Jean & WAUTHY, Xavier, 2004. "Two-sided markets and price competition with multi-homing," CORE Discussion Papers 2004030, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    6. Mark Armstrong, 2006. "Competition in two‐sided markets," RAND Journal of Economics, RAND Corporation, vol. 37(3), pages 668-691, September.
    7. Kaiser, Ulrich & Wright, Julian, 2006. "Price structure in two-sided markets: Evidence from the magazine industry," International Journal of Industrial Organization, Elsevier, vol. 24(1), pages 1-28, January.
    8. repec:reg:rpubli:253 is not listed on IDEAS
    9. Mark Armstrong & Julian Wright, 2007. "Two-sided Markets, Competitive Bottlenecks and Exclusive Contracts," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 32(2), pages 353-380, August.
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    More about this item


    Two-sided markets; network externalities; heterogeneous agents.;

    JEL classification:

    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets

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