Homogeneous Platform Competition with Heterogeneous Consumers

Jeitschko, Thomas D.; Tremblay, Mark J.

doi:10.2139/ssrn.2441190

Cited by 12 publications

(7 citation statements)

References 36 publications

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“…Athey et al (2016) and Ambrus et al (2016) study endogenous homing in media markets on the ad-side (keeping the consumer side exogenously fixed), whereas Jeitschko and Tremblay (2017) model competition between platforms to attract agents on both market sides and allow both to make their homing decisions endogenously.…”

Section: Multihoming: the Benefits And Implicationsmentioning

confidence: 99%

Platform Architecture and Quality Trade-offs of Multihoming Complements

Cennamo

Özalp

Kretschmer

2018

Information Systems Research

196

142

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Multihoming -the decision to design a complement to operate on multiple platforms -is becoming increasingly common in many platform markets. Perceived wisdom suggests that multihoming is beneficial for complement providers as they expand their market reach, but it reduces differentiation among competing platforms as the same complements become available on different platforms. We argue that complement providers face tradeoffs when designing their products for multiple platform architectures -they must decide how far to specialize the complement to each platform technological specifications. Because of these tradeoffs, multihoming complements can have different quality performance across platforms. In a study of the US video game industry, we find that multihoming games have lower quality performance on a technologically more complex console than on a less complex one. Also, games designed for and released on a focal platform have lower quality performance on platforms they are subsequently multihomed to. However, games that are released on the complex platform with a delay suffer a smaller drop in quality on complex platforms. This has important implications for platform competition, and for managers considering expanding their reach through multihoming. The logic is that multihoming offers potential additional revenues at limited costs for complementors, implicitly assuming that complements are the same on different platforms. But many platforms are not simple (two-sided) markets enabling transactions; they are also technology infrastructures whose features shape the development of third-party complementary products (Anderson et al. 2014;Gawer 2014, Tiwana et al.2010, Yoo et al. 2010. 2 Complements frequently must be tailored to a platform's core technological functions and interface specifications to take full advantage of its performance (Anderson et al. 2014, Claussen et al. 2015b, Tiwana 2015. In developing for multiple platforms, complementors must decide how far to specialize the complement to one platform (Schilling, 2000, Tiwana 2015, Yoo et al. 2010. We ask how the tradeoffs complementors face when designing products for multiple platforms affect the quality performance of multihoming complements across platforms. , Tiwana et al. 2010, Gawer 2014. As a system comprises the platform and its complements, the effect of platform architecture on both platform performance and complement supply matters for value creation at the system level (Cennamo 2016). the core technology components (e.g., processor cores), and the larger the number of specialized processors requiring a specific programming language for optimal utilization (i.e., no clean interface to handle the interdependencies), the more complex the platform. Complement developers must therefore choose to either use that language to optimally "conform" (Tiwana 2015) to the complex platform's specifications at the expense of integration and performance on other platforms, or to design the complement so it uses the lowest common denominator acr...

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Section: Multihoming: the Benefits And Implicationsmentioning

confidence: 99%

Platform Architecture and Quality Trade-offs of Multihoming Complements

Cennamo

Özalp

Kretschmer

2018

Information Systems Research

196

142

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“…More recently, Halaburda, Jullien and Yehezkel (2018),Halaburda and Yehezkel (2016) andBiglaiser and Cremer (2018) relooked at this issue emphasizing the role of favourable expectations as a driver of the incumbency advantage. 5 SeeArmstrong (2006) andJeitschko and Tremblay (2018) for further discussion.6 Anderson and Coate (2005) offer an early contribution, whileAmbrus et al (2016) andPrat and Valletti (2019) offer newer ones.…”

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confidence: 99%

Merger Policy in Digital Markets: AnEx PostAssessment†

Argentesi

Buccirossi

Calvano

et al. 2020

Journal of Competition Law &Amp; Economics

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This paper presents a broad retrospective evaluation of mergers and merger decisions in markets dominated by multisided digital platforms. First, we document almost 300 acquisitions carried out by three major tech companies—Amazon, Facebook, and Google—between 2008 and 2018. We cluster target companies on their area of economic activity providing suggestive evidence on the strategies behind these mergers. Second, we discuss the features of digital markets that create new challenges for competition policy. By using relevant case studies as illustrative examples, we discuss theories of harm that have been used or, alternatively, could have been formulated by authorities in these cases. Finally, we retrospectively examine two important merger cases, Facebook/Instagram and Google/Waze, providing a systematic assessment of the theories of harm considered by the UK competition authorities as well as evidence on the evolution of the market after the transactions were approved. We discuss whether the competition authority performed complete and careful analyses to foresee the competitive consequences of the investigated mergers and whether a more effective merger control regime can be achieved within the current legal framework.

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“…Proposition 1 (proven in the Appendix) summarizes this finding. 22 Proposition 1. When there is no monetary transfer for zero-rating, the ISP offers to zerorate a content provider whose quality of content is lower if content is sufficiently substitutable (γ > γ I ).…”

Section: Equilibriummentioning

confidence: 99%

“…Aside from being broadly related to the theoretical literature on pricing in multi-sided markets (Armstrong, 2006;Tirole, 2003, 2006;Rysman, 2009;Weyl, 2010;Jeitschko and Tremblay, 2018), the analysis in this manuscript is closely related to the study of net neutrality. The static and dynamic impact of violations of net neutrality-simply put, a ban on discrimination at the point where content terminates-has been shown to vary widely according to the framework under analysis (i.e., the means of modeling prioritization, the level of ISP competition, etc.).…”

Section: Literaturementioning

confidence: 99%

Zero-Rating and Vertical Content Foreclosure

Jeitschko

Kim

Yankelevich

2021

Information Economics and Policy

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We study zero-rating, a practice whereby an Internet service provider (ISP) that limits retail data consumption exempts certain content from that limit. This practice is particularly controversial when an ISP zero-rates its own vertically integrated content, because the data limit and ensuing overage charges impose an additional cost on rival content. We find that zero-rating and vertical integration are complementary in improving social welfare, though potentially at the expense of lower profit to an unaffiliated content provider. Moreover, allowing content providers to pay for zero-rating via a sponsored data plan raises welfare by inducing the ISP to zero-rate more content.

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Homogeneous Platform Competition with Heterogeneous Consumers

Cited by 12 publications

References 36 publications

Platform Architecture and Quality Trade-offs of Multihoming Complements

Platform Architecture and Quality Trade-offs of Multihoming Complements

Merger Policy in Digital Markets: AnEx PostAssessment†

Zero-Rating and Vertical Content Foreclosure

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