Platform competition in two-sided markets

Jean Charles Rochet*, Jean Tirole

*Corresponding author for this work

    Research output: Contribution to journalArticlepeer-review

    1792 Scopus citations

    Abstract

    Many if not most markets with network externalities are two-sided. To succeed, platforms in industries such as software, portals and media, payment systems and the Internet, must "get both sides of the market on board." Accordingly, platforms devote much attention to their business model, that is, to how they court each side while making money overall. This paper builds a model of platform competition with two-sided markets. It unveils the determinants of price allocation and end-user surplus for different governance structures (profit-maximizing platforms and not-for-profit joint undertakings), and compares the outcomes with those under an integrated monopolist and a Ramsey planner.

    Original languageEnglish (US)
    Pages (from-to)990-1029
    Number of pages40
    JournalJournal of the European Economic Association
    Volume1
    Issue number4
    DOIs
    StatePublished - Jun 2003

    ASJC Scopus subject areas

    • Economics, Econometrics and Finance(all)

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