Two-Sided Platforms and Biases in Technology Adoption

Abstract

We investigate how platform market power and business models a¤ect platforms' design choices in two-sided markets, where platforms may …nd it optimal to charge zero price on the consumer side and to extract surplus on the advertising side. We consider design choices a¤ecting both sides in opposite ways and compare private incentives with social incentives. Platforms'design biases depend crucially on whether they can charge any price on the consumer side. We apply the framework to technology adoption, privacy, and ad load choices. Our results provide a rationale for a tougher competition policy to curb market power of ad-funded platforms.

Two-sided markets, pricing, and network effects

“…11 Teh (2021) and Choi and Jeon (2020) provide interesting analysis of the link between pricing instruments and platform design.…”

Platform Precommitment via Decentralization

“…I focus on the value of commitment for the entrepreneur as a function of the size of the locked-in effect of the platform. I also connect to papers that -from a regulatory perspective -investigate platform governance, for example Jullien and Pavan (2019), Choi and Jeon (2022) and Teh (2022). For a general overview of the literature, see for example Farrell and Klemperer (2007) and Belleflamme and Peitz (2021).…”

Versatile Stochastic Two-Sided Platform Models

“…In such market systems, participation from one side depends on the value created by presence of the other side over the platform [11,12]. Theoretical and mathematical approaches for the two-side platform models have been have widely studied by various contributors [13][14][15][16][17]. Additionally, the concept of the two-sided markets has been adapted for solving the specific situations [18][19][20][21][22][23].…”