Discussion Paper Details

Please find the details for DP12435 in an easy to copy and paste format below:

Full Details   |   Bibliographic Reference

Full Details

Title: Segmentation versus Agglomeration: Competition between Platforms with Competitive Sellers

Author(s): Heiko Karle, Martin Peitz and Markus Reisinger

Publication Date: November 2017

Keyword(s): endogenous segmentation, intermediation, market structure, price competition and Two-sided markets

Programme Area(s): Industrial Organization

Abstract: For many products, platforms enable sellers to transact with buyers. We show that the competitive conditions among sellers shape the market structure in platform industries. If product market competition is tough, sellers avoid competitors by joining different platforms. This allows platforms to sustain high fees and explains why, for example, in some online markets, several homogeneous platforms segment the market. Instead, if product market competition is soft, agglomeration on a single platform emerges, and platforms fight for the dominant position. These insights give rise to novel predictions. For instance, market concentration and fees are negatively correlated in platform industries, which inverts the standard logic of competition.

For full details and related downloads, please visit:

Bibliographic Reference

Karle, H, Peitz, M and Reisinger, M. 2017. 'Segmentation versus Agglomeration: Competition between Platforms with Competitive Sellers'. London, Centre for Economic Policy Research.