Co-opetition between Differentiated Platforms in Two-Sided Markets

Journal of Management Information Systems, Vol. 29, Issue 2, 2012

Posted: 13 Jun 2017 Last revised: 11 Jun 2019

See all articles by Ravi Mantena

Ravi Mantena

University of Rochester - Simon Business School

Rajib L. Saha

Indian School of Business (ISB), Hyderabad

Abstract

Technology is an important factor underlying the value propositions of intermediary platforms in two-sided markets. Here, we address two key questions related to the effect of technology in platform markets. First, how does technology asymmetry affect competition between platforms? Second, how does it affect the incentives for platforms to collaborate? Using a game-theoretic model of a two-sided market where technology strongly influences network value, we show that small asymmetries in platform technologies can translate into large differences in their profitability. We find that technology improvements by the inferior platform do not significantly increase its profits, but can reduce opportunities for fruitful cooperation, since collaboration is less likely in markets with closely matched competitors. We also show that collaboration is most profitable when it takes the form of direct network interconnection. Interestingly, collaboration may provide incentives for a dominant platform to accommodate entry, where it would not otherwise do so.

Keywords: Competitive Strategy, Co-opetition, Game Theory, Network Sharing, Platform Interconnections, Technology Platforms, Two-Sided Markets

Suggested Citation

Mantena, Ravi and Saha, Rajib Lochan, Co-opetition between Differentiated Platforms in Two-Sided Markets. Journal of Management Information Systems, Vol. 29, Issue 2, 2012. Available at SSRN: https://ssrn.com/abstract=2984269

Ravi Mantena

University of Rochester - Simon Business School ( email )

Rochester, NY 14627
United States

Rajib Lochan Saha (Contact Author)

Indian School of Business (ISB), Hyderabad ( email )

Hyderabad, Gachibowli 500 111
India

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