Jaskold Gabszewicz, Jean
[UCL]
Wauthy, Xavier
[FUSL]
We model platform competition in a market where products are characterized by cross network externalities. Consumers differ in their valuation of these externalities. Although the exogenous set-up is entirely symmetric, we show that platform competition induces a vertical differentiation structure that allows for the co-existence of asymmetric platforms in equilibrium. We establish this result in two set-ups: in the first one platforms commit to prices, in the second one they commit to network sizes.
Bibliographic reference |
Jaskold Gabszewicz, Jean ; Wauthy, Xavier. Vertical product differentiation and two-sided markets. In: Economics Letters, Vol. 123, no.1, p. 58-61 (2014) |
Permanent URL |
http://hdl.handle.net/2078.1/142527 |