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Multihoming and Oligopolistic Platform Competition

  • Tat-How Teh
  • Chunchun Liu
  • Julian Wright
  • Junjie Zhou
American Economic Journal: Microeconomics
vol. 15, no. 4, November 2023
(pp. 68-113)
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Abstract

We provide a general framework to analyze competition between any number of symmetric two-sided transaction platforms, in which buyers and sellers can multihome. We show how key primitives such as the number of platforms, the fraction of buyers that find multihoming costly, the value of transactions, and the degree of user heterogeneity jointly determine the level and structure of platform fees. Even though platform entry always reduces the total fee level, whether it shifts the fee structure in favor of buyers or sellers depends on whether most of the buyers are singlehoming or multihoming.

Citation

Teh, Tat-How, Chunchun Liu, Julian Wright, and Junjie Zhou. 2023. "Multihoming and Oligopolistic Platform Competition." American Economic Journal: Microeconomics, 15 (4): 68-113. DOI: 10.1257/mic.20210324

Additional Materials

JEL Classification

  • D43 Market Structure, Pricing, and Design: Oligopoly and Other Forms of Market Imperfection
  • L11 Production, Pricing, and Market Structure; Size Distribution of Firms
  • L13 Oligopoly and Other Imperfect Markets
  • L40 Antitrust Issues and Policies: General
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