Template-Type: ReDIF-Paper 1.0
Title: Segmentation Versus Agglomeration: Competition Between Platforms With Competitive Sellers
Author-Name: Heiko Karle
Author-Email: h.karle@fs.de
Author-Name: Martin Peitz
Author-Email: Martin.Peitz@gmail.com
Author-Name: Markus Reisinger
Author-Email: m.reisinger@fs.de
Classification-JEL: L13, D43
Keywords: intermediation, two-sided markets, market structure, price competition, endogenous segmentation

Abstract: For many products, platforms enable sellers to transact with buyers. We show
that the competitive conditions among sellers shape the market structure in plat
form industries. If product market competition is tough, sellers avoid competitors
by joining different platforms. This allows platforms to sustain high fees and ex
plains why, for example, in some online markets, several homogeneous platforms
segment the market. Instead, if product market competition is soft, agglomeration
on a single platform emerges, and platforms fight for the dominant position. These
insights give rise to novel predictions. For instance, market concentration and fees
are negatively correlated in platform industries, which inverts the standard logic of
competition.

Note: 
Length: 104
Creation-Date: 2019-06
Revision-Date: 
File-URL: https://www.crctr224.de/research/discussion-papers/archive/dp101
File-Format: application/pdf
Handle: RePEc:bon:boncrc:CRCTR224_2019_101