Discussion paper

DP15204 The tension between market shares and profit under platform competition

We introduce asymmetries across platforms in the linear model of competing two-sided platforms with singlehoming on both sides and fully characterize the price equilibrium. We identify market environments in which one platform has a larger market share on both sides while obtaining a lower profit than the other platform. This platform enjoys a competitive advantage on one or both sides. Our finding raises further doubts on using market shares as a measure of market power in platform markets.

£6.00
Citation

Belleflamme, P, M Peitz and E Toulemonde (eds) (2020), “DP15204 The tension between market shares and profit under platform competition”, CEPR Press Discussion Paper No. 15204. https://new.cepr.org/publications/dp15204