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Discussion Paper Details

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Title: The tension between market shares and profit under platform competition

Author(s): Paul Belleflamme, Martin Peitz and Eric Toulemonde

Publication Date: August 2020

Keyword(s): Antitrust, market power, Market Share, network effects, oligopoly and Two-sided platforms

Programme Area(s): Industrial Organization

Abstract: We introduce asymmetries across platforms in the linear model of competing two-sided platforms with singlehoming on both sides and fully characterize the price equilibrium. We identify market environments in which one platform has a larger market share on both sides while obtaining a lower profit than the other platform. This platform enjoys a competitive advantage on one or both sides. Our finding raises further doubts on using market shares as a measure of market power in platform markets.

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Bibliographic Reference

Belleflamme, P, Peitz, M and Toulemonde, E. 2020. 'The tension between market shares and profit under platform competition'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=15204