A Simple Model of a Three-Sided Market
6 Pages Posted: 18 Oct 2013
Date Written: October 16, 2013
We provide a simple model of a three-sided market. In a departure from existing models of two-sided markets, our model highlights that an increase in competition on one side does not necessarily increase prices on other sides. The direction of a price change depends on the interdependency across different sides. The comparative statics from our model match recent empirical findings on the effect of Craigslist’s entry on US newspapers.
Keywords: Two-sided markets, Network effects, Newspapers
JEL Classification: L1, L2
Suggested Citation: Suggested Citation