One Sided Access in Two-Sided Markets

35 Pages Posted: 1 Feb 2013 Last revised: 21 Feb 2013

See all articles by Marianne Verdier

Marianne Verdier

Université Paris 2 Panthéon Assas

Date Written: February 19, 2013

Abstract

In this paper, I analyze the incentives of a monopolistic platform to open its infrastructure to an entrant on the buyer side of the market. If buyer and seller demands are linear and identical, and if the entrant operates on a separate market, I show that entry distorts the price structure in favor of sellers. I also show that the entrant's profits may increase with the access charge if seller demand is very elastic to prices, because the entrant values the presence of sellers on the platform. If the entrant competes with the platform, its profits may also increase with the access charge if prices are strategic complements and if the degree of product differentiation is sufficiently low.

Keywords: platform, two-sided markets, entry, access

JEL Classification: E42, L1, 033

Suggested Citation

Verdier, Marianne, One Sided Access in Two-Sided Markets (February 19, 2013). Available at SSRN: https://ssrn.com/abstract=2209379 or http://dx.doi.org/10.2139/ssrn.2209379

Marianne Verdier (Contact Author)

Université Paris 2 Panthéon Assas ( email )

France

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