DP15204 The tension between market shares and profit under platform competition

Author(s): Paul Belleflamme, Martin Peitz, Eric Toulemonde
Publication Date: August 2020
Keyword(s): Antitrust, market power, Market Share, network effects, oligopoly, Two-sided platforms
JEL(s): D43, L13, L86
Programme Areas: Industrial Organization
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=15204

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.