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Estimating Platform Market Power in Two-Sided Markets with an Application to Magazine Advertising†

Estimating Platform Market Power in Two-Sided Markets with an Application to Magazine Advertising† AbstractIn two-sided markets, two groups of agents interact through platforms. Because agents’ decision to join a platform is affected by the presence of agents on the other side, their interactions create indirect network externalities and make platforms’ strategies different from those of firms in one-sided markets. In this paper, I use a structural model to show that platforms may take a loss on one side of the market to make a profit on the other side and that platform mergers may benefit some agents by lowering prices or attracting more agents on the other side of the market. (JEL D62, G34, L82, M37) http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png American Economic Journal: Microeconomics American Economic Association

Estimating Platform Market Power in Two-Sided Markets with an Application to Magazine Advertising†

Estimating Platform Market Power in Two-Sided Markets with an Application to Magazine Advertising†

American Economic Journal: Microeconomics , Volume 13 (2) – May 1, 2021

Abstract

AbstractIn two-sided markets, two groups of agents interact through platforms. Because agents’ decision to join a platform is affected by the presence of agents on the other side, their interactions create indirect network externalities and make platforms’ strategies different from those of firms in one-sided markets. In this paper, I use a structural model to show that platforms may take a loss on one side of the market to make a profit on the other side and that platform mergers may benefit some agents by lowering prices or attracting more agents on the other side of the market. (JEL D62, G34, L82, M37)

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Publisher
American Economic Association
Copyright
Copyright © 2021 © American Economic Association
ISSN
1945-7685
DOI
10.1257/mic.20160052
Publisher site
See Article on Publisher Site

Abstract

AbstractIn two-sided markets, two groups of agents interact through platforms. Because agents’ decision to join a platform is affected by the presence of agents on the other side, their interactions create indirect network externalities and make platforms’ strategies different from those of firms in one-sided markets. In this paper, I use a structural model to show that platforms may take a loss on one side of the market to make a profit on the other side and that platform mergers may benefit some agents by lowering prices or attracting more agents on the other side of the market. (JEL D62, G34, L82, M37)

Journal

American Economic Journal: MicroeconomicsAmerican Economic Association

Published: May 1, 2021

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