Multihoming and Oligopolistic Platform Competition

51 Pages Posted: 18 Nov 2021 Last revised: 18 Jul 2022

See all articles by Chunchun Liu

Chunchun Liu

National University of Singapore (NUS) - Department of Economics

Tat-How Teh

Chinese University of Hong Kong (Shenzhen)

Julian Wright

National University of Singapore (NUS) - Department of Economics

Junjie Zhou

Tsinghua University - Tsinghua University School of Economics and Management

Date Written: July 17, 2022

Abstract

We provide a general framework to analyze competition between any number of two-sided platforms, in which buyers and sellers can multihome, and platforms compete on transaction fees charged on both sides. The framework allows buyers and sellers to have heterogenous benefits from using platforms for transactions, and additionally, buyers to have idiosyncratic preferences over using the different platforms. We highlight that multihoming in participation is not the only thing driving market outcomes; one has to also take into account buyers' preferences over which platform they transact on. We show how key primitives such as the number of platforms, the fraction of buyers that find multihoming costly, the value of transactions for buyers and sellers, and the degree of buyer heterogeneity jointly determine the level and structure of platform fees.

Keywords: two-sided markets, fee structure, ride-hailing, payment cards

JEL Classification: L11, L13, L4

Suggested Citation

Liu, Chunchun and Teh, Tat-How and Wright, Julian and Zhou, Junjie, Multihoming and Oligopolistic Platform Competition (July 17, 2022). Available at SSRN: https://ssrn.com/abstract=3948799 or http://dx.doi.org/10.2139/ssrn.3948799

Chunchun Liu

National University of Singapore (NUS) - Department of Economics ( email )

1 Arts Link, AS2 #06-02
Singapore 117570, Singapore 119077
Singapore

Tat-How Teh (Contact Author)

Chinese University of Hong Kong (Shenzhen) ( email )

2001 Longxiang Boulevard, Longgang District
Shenzhen, 518172

Julian Wright

National University of Singapore (NUS) - Department of Economics ( email )

AS2 Level 6, 1 Arts Link
Singapore 117570
Singapore
6568743941 (Phone)
6567752646 (Fax)

HOME PAGE: http://profile.nus.edu.sg/fass/ecsjkdw/

Junjie Zhou

Tsinghua University - Tsinghua University School of Economics and Management ( email )

Beijing
China

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
303
Abstract Views
785
rank
148,386
PlumX Metrics