Platform Competition With Endogenous Homing

Jeitschko, Thomas D.; Tremblay, Mark J.

doi:10.1111/iere.12457

Cited by 49 publications

(21 citation statements)

References 25 publications

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“…Our study makes several contributions. First, it adds to the growing literature on platforms (e.g., Eisenmann, Parker, & Van Alstyne, 2011; Iansiti & Levien, 2004; Jeitschko & Tremblay, 2020; Kapoor & Agarwal, 2017; Piezunka et al, 2015; Yoffie & Cusumano, 2015). In many prior studies, customers' homing tendencies have been assumed to be the same across all platforms in a market (e.g., Armstrong, 2006; Casadesus‐Masanell & Zhu, 2010; Choi, 2010; Gabszewicz & Wauthy, 2004; Landsman & Stremersch, 2011; Zhu & Iansiti, 2012).…”

Section: Introductionmentioning

confidence: 94%

“…Our study makes several contributions. First, it adds to the growing literature on platforms (e.g., Eisenmann, Parker, & Van Alstyne, 2011;Iansiti & Levien, 2004;Jeitschko & Tremblay, 2020;Kapoor & Agarwal, 2017;Piezunka et al, 2015;Yoffie & Cusumano, 2015). In many prior 1 We choose 1963 as the end of our study period because of data availability and because of major changes in TV broadcasting, which switched from black and white to color around this time (Murray, 2018).…”

Section: Introductionmentioning

confidence: 95%

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Homing and platform responses to entry: Historical evidence from the U.S. newspaper industry

Park

Seamans

Zhu

2020

Strategic Management Journal

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Research summary We examine how heterogeneity in customers' tendencies to single‐home or multi‐home affects a platform's competitive responses to new entrants in the market. We first develop a formal model to generate predictions about how a platform will respond. We then empirically test it, leveraging a historical setting: TV station entry into local U.S. newspaper markets from 1945 to 1963. A notable feature of this setting is a quasi‐natural experiment: the staggered geographic and temporal rollout of TV stations that was temporarily halted during the Korean War. We find that platform firms indeed take their customers' homing tendencies into account in their responses to competition: after a TV station enters the newspaper market, newspaper firms with more single‐homing consumers had lower subscription prices, circulations, and advertising rates. Managerial summary The theoretical and empirical results in our paper suggest that platform firms operating in multi‐sided market settings need to consider their customers' single‐homing and multi‐homing tendencies. Heterogeneity in these tendencies is an important demand‐side factor to consider when formulating responses to a competitor's entry.

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Section: Introductionmentioning

confidence: 94%

“…Our study makes several contributions. First, it adds to the growing literature on platforms (e.g., Eisenmann, Parker, & Van Alstyne, 2011;Iansiti & Levien, 2004;Jeitschko & Tremblay, 2020;Kapoor & Agarwal, 2017;Piezunka et al, 2015;Yoffie & Cusumano, 2015). In many prior 1 We choose 1963 as the end of our study period because of data availability and because of major changes in TV broadcasting, which switched from black and white to color around this time (Murray, 2018).…”

Section: Introductionmentioning

confidence: 95%

Homing and platform responses to entry: Historical evidence from the U.S. newspaper industry

Park

Seamans

Zhu

2020

Strategic Management Journal

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“…Nevertheless, some works challenge conventional wisdom according to which multihoming leads to monopoly prices on that side. Jeitschko and Tremblay (2014) show that when the homing decision is endogenous, prices will not converge to monopoly prices on the multihoming side, although those would be larger than without multihoming. But more surprising are the Belleflamme and Peitz (2019a)'s results.…”

Section: Pricing In Multisided Marketsmentioning

confidence: 99%

Multisided Platforms and Markets: A Survey of the Theoretical Literature

Sánchez-Cartas

León

2021

Journal of Economic Surveys

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Platforms are everywhere. The rise of Uber, Netflix, and Facebook has attracted a lot of attention to this business model. However, despite its relevance and presence in the digital economy, the definition of platforms, their main characteristics, the intuitions about how they set prices, solve coordination issues, or choose their ownership structure seem to be scattered in many papers. This review attempts to organize the last two decades of research on multisided platforms around three essential elements of platforms: price structure, network effects, and control rights. We highlight which definitions are used in the literature, how they are related to the defining characteristics of platforms, and what research has been made on those characteristics. We pay special attention to the research done on pricing, coordination problems, and ownership structure. We conclude by reviewing the theoretical evidence around monopolization and competition policy in multisided markets.

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“…Auctions as a whole. See Rochet and Tirole (2003), Armstrong (2006), Jeitschko and Tremblay (2014), and Jin and Rysman (2015) for competition among two-sided platforms, and Baye and Morgan (2001) and Deltas and Jeitschko (2007) for monopoly platform charges with two-sided endogenous entries. 9 The exception is Vintage IV ticket prices that skyrocket at the end of the break season.…”

Section: Secondary Marketsmentioning

confidence: 99%

Search and resale frictions in a two-sided online platform: A case of multi-use assets

Yoshimoto

Nakabayashi

2019

Journal of Economic Behavior & Organization

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How large are two-sided transaction costs in online platform trades, and who are the major beneficiaries of friction cost reductions? Using a dataset of a multi-use train ticket resale market, we analyze the welfare structure with buyer-seller matching frictions on an online platform. Our model shows that competitive online resale market prices work as a conductor of transaction cost externalities, clarifying what types of buyers bear what friction costs. The estimation results show that individual-level welfare losses, which could be considered an online resale market dead-weight loss, are non-negligibly large and heterogeneous across buyers, ranging from 3% to 21% of the new good price. Welfare losses are particularly disadvantageous to users who demand small degrees of usage, as they are more likely to be excluded from trading opportunities. Our model also suggests that, when competitive resale markets experience friction cost reductions, welfare gains are larger among small degree users of resalable goods, providing an explanation for the recent expansion of high-turnover online trades.

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Platform Competition With Endogenous Homing

Cited by 49 publications

References 25 publications

Homing and platform responses to entry: Historical evidence from the U.S. newspaper industry

Homing and platform responses to entry: Historical evidence from the U.S. newspaper industry

Multisided Platforms and Markets: A Survey of the Theoretical Literature

Search and resale frictions in a two-sided online platform: A case of multi-use assets

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