From Win-Win to Winner-Take-All

Abstract

This paper studies when a two-sided market features win-win (market sharing), winner-take-most (market dominance) or winner-take-all (monopoly). While symmetric market structure is a natural result of competition among symmetric platforms, asymmetry also arises when network effects are strong. Market dominance and monopoly are always stable but market sharing is stable only if asymmetry cannot happen. We characterize a continuous transition pattern of stable market structures as network effects increase: from win-win, to winner-take-most, and finally to winner-take-all. From welfare perspective, winner-take-most and winner-take-all dominate win-win.

Keywords: Win-win; Winner-take-most, Winner-take-all, Market dominance, Two-sided markets, Stability, Multiple platforms

JEL Classification: D4, D43, L1