Platform Competition in Two-Sided Markets

Rochet, Jean Charles; Tirole, Jean

doi:10.1162/154247603322493212

“…For instance, in the ICT (Information Communications Technology) industry the more complementors join the ecosystem to supply complementarities, the more valuable the platform becomes to consumers due to a greater variety of choice (Scholten and Scholten 2012). Hence, the network effect between supply and demand sides is key to sustaining the platform business (Armstrong 2006;Li and Pénard 2014;Rochet and Tirole 2003). Management scholars have also proposed a similar concept to restructure the industry and reduce the transaction cost between partners in order to leverage industriallevel innovation (Gawer and Cusumano 2014;Wulf and Butel 2017).…”

Section: Focal Firm Platform: Network Effectmentioning

confidence: 99%

Business ecosystem research agenda: more dynamic, more embedded, and more internationalized

Rong

¹

,

Lin

²

,

Li

³

et al. 2018

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We explore the emerging body of research focusing on business ecosystems (BEs). The study of inter-organizational relationships has evolved from a focus at the level of firm, to the supply chain, the platform, and now towards the BE. The co-evolution of inter-related organizations is an essential element of BE research, rather than static structure. The success of leading internet companies in Asia, such

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“…The term was first used in 2002 by Rochet and Tirole (2003). Other authors (Parker and Van Alstyne 2000;Jullien, 2001, 2003;Evans 2003;Armstrong 2006) contributed to develop this concept, albeit using in some cases a different terminology.…”

Section: Two-sided and Media Marketsmentioning

confidence: 99%

“…Evans (2003) identified three conditions for two-sided markets organised via platforms to emerge: i) existence of two or more distinct group of customers; ii) existence of positive externalities in force of the connection or coordination of the two groups; iii) the need of an intermediary to internalise the externalities. Rochet and Tirole (2003) also focused on network externalities. They state that many, if not most of, markets with network externalities are two-sided markets.…”

Section: Two-sided and Media Marketsmentioning

confidence: 99%

Is the Google Platform a Two-Sided Market?

Luchetta

¹

2012

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. www.econstor.eu Terms of use: Documents in IS THE GOOGLE PLATFORM A TWO-SIDED MARKET?Giacomo Luchetta * AbstractProbably not. Or, at least, it is a sui generis two-sided market. Unlike other platforms, such as operating systems, credit cards, or night clubs, where a single transaction is performed via the platform, two different transactions take place on Google. Users look for search results, while advertisers look for users' eyeballs. Whilst operating systems, credit cards, and night clubs would be meaningless if either of the two sides were missing, search engines (like TV or newspapers) can exist under different market configurations. Indeed, in search engines network externalities run only from the number of users to advertisers, and not the other way around. This thesis is supported by the analysis of the existing literature on two-sided markets and the applications carried out so far to the economics of search engines.According to this analysis, a new construction of the relevant market where Google operates is proposed. Google operates as a retailer of eyeballs, or users' attention. In the upstream market, on one side, it buys well-profiled eyeballs from large retailers, i.e. major websites, at a positive price (Traffic Acquisition Costs); on the other side, it buys eyeballs from single consumers in exchange of search services (inkind payment). Then, it sells well-profiled eyeballs to advertisers in the downstream market. Based on this market construction, the allegations against Google are analysed as alleged violations of competition law along this vertical chain.

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“…12 The reduced form is then similar to a model of network externality. This type of externalities are referred to as "membership externalities" in Rochet and Tirole (2003).…”

Section: Registration Fees and Participation Externalitiesmentioning

confidence: 99%

“…The work of Rochet and Tirole (2003) focuses on the impact of the structure of transaction fees on the efficiency of trade, what they refer to as usage.…”

Section: Transaction Feesmentioning

confidence: 99%

Two-sided Markets and Electronic Intermediaries

Jullien¹

2005

CESifo Economic Studies

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in EconStor may TWO-SIDED MARKETS AND ELECTRONIC INTERMEDIARIES AbstractThe object of this paper is to discuss on-line intermediation from the perspective of two-sided markets. It builds a simple model of the intermediation activity when trading partners are involved in a commercial relationship and uses it to illustrate some of the results that emerge in the two-sided market literature, as well as to discuss some new aspects. The first part concentrates on a monopoly intermediation service and discusses both efficient pricing and monopoly pricing. The second part discusses the nature of competition between intermediaries, addressing issues as competitive crosssubsidies, multi-homing or tying.JEL Code: D4, D85, L12, L13, L14, L40.

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Platform Competition in Two-Sided Markets

Cited by 3,692 publications

References 15 publications

Business ecosystem research agenda: more dynamic, more embedded, and more internationalized

Business ecosystem research agenda: more dynamic, more embedded, and more internationalized

Is the Google Platform a Two-Sided Market?

Two-sided Markets and Electronic Intermediaries

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