Platforms and Network Effects
Forthcoming, Handbook of Game Theory and Industrial Organization, edited by Luis Corchon and Marco Marini, Edward Elgar.
38 Pages Posted: 10 Jan 2017
Date Written: September 2016
In many markets, user benefits depend on participation and usage decisions of other users giving rise to network effects. Intermediaries manage these network effects and thus act as platforms that bring users together. This paper reviews key findings from the literature on network effects and two-sided platforms. It lays out the basic models of monopoly platforms and platform competition, and elaborates on some routes taken by recent research.
Keywords: network effects, digital platforms, two-sided markets, tipping, platform competition
JEL Classification: D43, L13, L86
Suggested Citation: Suggested Citation