(Wednesday, 17th May 2006)
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The lecture will present recent developments in the economics of platforms, in particular based on the concept of two-sided markets. The concept refers to institutions that are used by two groups of actors (two sides) to interact, situations that are characterized by network externalities between these two distinct sides. The lecture will introduce to the various models and problematic arising in such a context. The first part will be devoted to the analysis of monopoly pricing and efficient prices, discussing the distinction between the participation to the platform activity and the level of usage, the role of transaction fees, with an emphasis on coordination issues. The second part will discuss competition between platforms, and issues such as cross-subsidy and “multi-homing” (this refers to the possibility that an agent uses several platforms). The last part will discuss some implications for anti-trust and regulation.
Bibliographical references :
Jullien B., "Two-Sided Markets and Electronic Intermediation", CESifo Economic Studies, vol. 51, p. 235-262, 2005.
Armstrong M. "Competition in Two-Sided Markets," mimeo, University College London, forthcoming, Rand Journal of Economics.
Caillaud B. and B. Jullien, "Chicken & Egg: Competition among intermediation service providers", Rand Journal of Economics, 34, 309-328, 2003.
Rochet J.C. and J. Tirole, "Platform Competition in Two-Sided Markets", Journal of the European Economic Association 1, 990-1029, 2003.