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A Simple Model of a Three-Sided Market

6 Pages Posted: 18 Oct 2013  

Robert Seamans

New York University (NYU) - Leonard N. Stern School of Business

Feng Zhu

Harvard University - Harvard Business School

Date Written: October 16, 2013

Abstract

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

Seamans, Robert and Zhu, Feng, A Simple Model of a Three-Sided Market (October 16, 2013). Available at SSRN: https://ssrn.com/abstract=2341356 or http://dx.doi.org/10.2139/ssrn.2341356

Robert Seamans (Contact Author)

New York University (NYU) - Leonard N. Stern School of Business ( email )

44 West 4th Street
New York, NY NY 10012
United States

Feng Zhu

Harvard University - Harvard Business School ( email )

Soldiers Field Road
Morgan 431
Boston, MA 02163
United States

HOME PAGE: http://www.hbs.edu/faculty/Pages/profile.aspx?facId=14938

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