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Horizontal Mergers Between Multi-Sided Platforms: Insights from Cournot Competition

Author

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  • Correia da silva, Joao
  • Jullien, Bruno
  • Lefouili, Yassine
  • Pinho, Joana
Abstract
This paper discusses the literature on horizontal mergers between multi-sided platforms and argues that the Cournot model can provide useful insights into the welfare effects of such mergers. To illustrate those insights, we develop a simple model in which two-sided platforms offer a homogeneous service and compete à la Cournot, and derive the effects of "average-marginal-cost-preserving" mergers on consumers on both sides of the market. We conclude with a discussion of several research avenues that could be explored to understand better the impact of horizontal mergers between multi-sided platforms.

Suggested Citation

  • Correia da silva, Joao & Jullien, Bruno & Lefouili, Yassine & Pinho, Joana, 2018. "Horizontal Mergers Between Multi-Sided Platforms: Insights from Cournot Competition," TSE Working Papers 18-946, Toulouse School of Economics (TSE).
    • Handle: RePEc:tse:wpaper:32901
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    3. Jiménez-Durán, Rafael, 2022. "The economics of content moderation: Theory and experimental evidence from hate speech on Twitter," Working Papers 324, The University of Chicago Booth School of Business, George J. Stigler Center for the Study of the Economy and the State.
    4. Belleflamme, Paul & Johnen, Johannes, 2023. "Non-Price Strategies of Marketplaces: A Survey," LIDAM Discussion Papers CORE 2023015, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    5. Takanori Adachi & Susumu Sato & Mark J. Tremblay, 2023. "Platform Oligopoly with Endogenous Homing: Implications for Mergers and Free Entry," Journal of Industrial Economics, Wiley Blackwell, vol. 71(4), pages 1203-1232, December.
    6. Liu, He & Li, Xuerong & Wang, Shouyang, 2021. "A bibliometric analysis of 30 years of platform research: Developing the research agenda for platforms, the associated technologies and social impacts," Technological Forecasting and Social Change, Elsevier, vol. 169(C).
    7. Paolo Bertoletti, 2022. "A Preference-Based Model of Platform Competition," Working Papers 486, University of Milano-Bicocca, Department of Economics.
    8. Eric Darmon & Thomas Le Texier & Zhiwen Li & Thierry Pénard, 2019. "Multimarket Contact and Platform Competition: Reassessing the Mutual Forbearance Hypothesis," Economics Working Paper Archive (University of Rennes & University of Caen) 2019-07, Center for Research in Economics and Management (CREM), University of Rennes, University of Caen and CNRS.
    9. Jullien, Bruno & Sand-Zantman, Wilfried, 2021. "The Economics of Platforms: A Theory Guide for Competition Policy," Information Economics and Policy, Elsevier, vol. 54(C).
    10. Katz, Michael L., 2021. "Big Tech mergers: Innovation, competition for the market, and the acquisition of emerging competitors," Information Economics and Policy, Elsevier, vol. 54(C).
    11. Bruno Jullien & Alessandro Pavan & Marc Rysman, 2021. "Two-sided markets, pricing, and network effects," Post-Print hal-03828345, HAL.
    12. Peitz, Martin & Samkharadze, Lily, 2022. "Collusion between non-differentiated two-sided platforms," Economics Letters, Elsevier, vol. 215(C).
    13. Martin Peitz, 2023. "Governance and Regulation of Platforms," CRC TR 224 Discussion Paper Series crctr224_2023_480, University of Bonn and University of Mannheim, Germany.
    14. Juan Manuel Sanchez‐Cartas & Gonzalo León, 2021. "Multisided Platforms And Markets: A Survey Of The Theoretical Literature," Journal of Economic Surveys, Wiley Blackwell, vol. 35(2), pages 452-487, April.
    15. Mikhail Klimenko & Jingwen Qu, 2023. "Global digital platforms, technology transfer and foreign direct investment policies in two‐sided markets," Economic Inquiry, Western Economic Association International, vol. 61(3), pages 584-604, July.
    16. Rafael Jimenez-Duran, 2021. "The Economics of Content Moderation: Theory and Experimental Evidence from Hate Speech on Twitter," Natural Field Experiments 00754, The Field Experiments Website.
    17. Hana BOR & Avraham KETKO, 2019. "A University Reinvents Itself: A Case Study For Understanding Strategic Mergers And Integration Between Academic Institutions," REVISTA DE MANAGEMENT COMPARAT INTERNATIONAL/REVIEW OF INTERNATIONAL COMPARATIVE MANAGEMENT, Faculty of Management, Academy of Economic Studies, Bucharest, Romania, vol. 20(3), pages 241-258, July.

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    More about this item

    Keywords

    Mergers; Multi-Sided Platforms; Cournot Competition;
    All these keywords.

    JEL classification:

    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • L41 - Industrial Organization - - Antitrust Issues and Policies - - - Monopolization; Horizontal Anticompetitive Practices

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