2 research outputs found
Imperfect Platform Competition: A General Framework
We propose a general model of imperfect competition among multi-product
firms, the consumption of whose goods yields externalities from one
consumer to another. We extend the allocation approach of Weyl (2010)'s
monopoly model, proposing a solution concept, Insulated Equilibrium,
that allows for tractable analysis of competition. In such an
equilibrium each firm's price on one side of the market adjusts to all
firms' participation levels on the other side, so as to insulate its own
allocation. This eliminates both the indeterminacy of consumer reactions
once platforms have set their tariffs and the multiplicity of reaction
functions that platforms can have to one another's tariffs. Our approach
allows us to derive intuitive first-order conditions characterizing
equilibrium without restrictive assumptions and to analyze the effects
of competition, mergers and regulation
Imperfect Platform Competition: A General Framework
We propose a general model of imperfect competition among multi-product
firms, the consumption of whose goods yields externalities from one
consumer to another. We extend the allocation approach of Weyl (2010)'s
monopoly model, proposing a solution concept, Insulated Equilibrium,
that allows for tractable analysis of competition. In such an
equilibrium each firm's price on one side of the market adjusts to all
firms' participation levels on the other side, so as to insulate its own
allocation. This eliminates both the indeterminacy of consumer reactions
once platforms have set their tariffs and the multiplicity of reaction
functions that platforms can have to one another's tariffs. Our approach
allows us to derive intuitive first-order conditions characterizing
equilibrium without restrictive assumptions and to analyze the effects
of competition, mergers and regulation