Complementary Platforms

36 Pages Posted: 17 Oct 2007 Last revised: 21 May 2014

See all articles by Patrick J. G. Van Cayseele

Patrick J. G. Van Cayseele

KU Leuven - Department of Economics

Jo Reynaerts

KU Leuven - Centre for Institutions and Economic Performance (LICOS)

Date Written: September 2007

Abstract

This paper studies pricing decisions in two-sided markets when platforms are needed simultaneously for the successful completion of a transaction. The model is a natural extension of the Cournot-Ellet theory of complementary monopoly featuring clear cut asymmetric single- and multihoming patterns across the market. The results indicate that the so-called anticommons problem generalizes to two-sided markets. Allocative inefficiencies arise as individual platforms do not take into account the negative pricing externality they exert on the other platforms. Mergers between such platforms then may be welfare enhancing, but involve a redistribution of surplus from one side of the market to the other. On the other hand, the limit of an atomistic allocation of property rights is not monopoly pricing. This indicates that there also exist differences with the received theory of complementarity.

Keywords: Two-Sided Markets, Complements, The Anticommons Problem, Patent Policy, Media Advertising

JEL Classification: D43, D62, K11, L13, L4, L5

Suggested Citation

Van Cayseele, Patrick G. J. and Reynaerts, Jo, Complementary Platforms (September 2007). Amsterdam Center for Law & Economics Working Paper No. 2007-09, Available at SSRN: https://ssrn.com/abstract=1021705 or http://dx.doi.org/10.2139/ssrn.1021705

Patrick G. J. Van Cayseele (Contact Author)

KU Leuven - Department of Economics ( email )

Leuven, B-3000
Belgium
+32-16-326830 (Phone)
+32-16-326796 (Fax)

Jo Reynaerts

KU Leuven - Centre for Institutions and Economic Performance (LICOS) ( email )

Debériotstraat, 34
B-3000 Leuven
Belgium

HOME PAGE: http://www.econ.kuleuven.be/jo.reynaerts

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
173
Abstract Views
1,189
rank
204,996
PlumX Metrics