Platform competition and seller investment incentives

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• 作者：Paul Belleflamme ; Martin Peitz
• 关键词：Two-sided markets ; Network effects ; Intermediation ; Investment incentives
• 刊名：European Economic Review
• 出版年：2010
• 出版时间：November 2010
• 年：2010
• 卷：54
• 期：8
• 页码：1059-1076
• 全文大小：276 K

文摘

Many products and services are not sold on open platforms but on competing for-profit platforms, which charge buyers and sellers for access. What is the effect of for-profit intermediation on seller investment incentives? Since for-profit intermediaries reduce the available rents in the market, one might naively suspect that sellers have weaker investment incentives with competing for-profit platforms. However, we show that for-profit intermediation may lead to overinvestment when free access would lead to underinvestment because investment decisions affect the strength of indirect network effects and, thus, access prices. We characterize the effect of for-profit intermediation on investment incentives depending on the nature of the investment and on which side of the market singlehomes.