Platform market competition with endogenous side decisions

Jay Pil Choi, Yusuke Zennyo

Research output: Contribution to journalArticle

3 Citations (Scopus)

Abstract

This paper develops a framework to analyze platform competition in two-sided markets in which agents endogenously decide on which side of a platform to join. We characterize the equilibrium pricing structure and perform a comparative statics analysis on how the distribution of agents’ preferences affects the platforms’ profits. We also show that the market equilibrium under profit-maximizing platforms leads to the first best social surplus, which illustrates the importance of the price mechanism to induce more balanced participation across the two sides. This framework can be applied to analyze market competition for “rental” or “sharing” platforms. In addition, we extend our analysis to consider an initial investment stage, which makes participants the owner of some durable goods to rent out.

Original languageEnglish
Pages (from-to)73-88
Number of pages16
JournalJournal of Economics and Management Strategy
Volume28
Issue number1
DOIs
Publication statusPublished - 2019 Mar 1

All Science Journal Classification (ASJC) codes

  • Business, Management and Accounting(all)
  • Economics and Econometrics
  • Strategy and Management
  • Management of Technology and Innovation

Fingerprint Dive into the research topics of 'Platform market competition with endogenous side decisions'. Together they form a unique fingerprint.

  • Cite this