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Toshiki Kodera
''Spatial competition among multiple platforms''
( 2010, Vol. 30 No.2 )
We study spatial competition in two-sided markets, in which platforms engage in price competition in a circular city. After analyzing the pricing and profits of the unique symmetric equilibrium for a given number of platforms, we derive the number of platforms under free entry and compare it with the social optimum. We consider the case with or without a price restriction. In contrast to the excess entry result in Salop's (1979) model, the number of platforms is smaller than the social optimum if a minimum price binds, and if cross-group network effects are sufficiently large for a group of agents.
JEL: L1 - Market Structure, Firm Strategy, and Market Performance: General
Manuscript Received : Sep 01 2009 Manuscript Accepted : May 25 2010

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