Strategic Intermediation in a Two-Sided Market
Strategic Intermediation in a Two-Sided Market
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发表时间:
2004
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通讯作者:
Andrea Galeotti-;José Luis Moraga-González-
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作者:
Andrea Galeotti-;José Luis Moraga-González-
We examine a two-sided market where intermediaries compete to attract advertising from firms and audience from buyers. Firms sell homogeneous products, compete in prices and must advertise them in the intermediary platforms to attract consumers. Buyers must subscribe to the intermediaries to receive product and price information. We show that a monopolist intermediary maximizes profits by oering advertising for free and getting the bulk of its profits from consumers. In this way the intermediary fully internalizes the externalities between buyers and sellers, which produces an ecient outcome. By contrast, when the market for information is operated by competing intermediaries, firms’ and consumers’ attempts to obtain surplus from participation lead to the emergence of coordination frictions, which produce a market failure. Eciency can only be restored if consumers multi-home surely and intermediaries entry costs are suciently low.