Search Diversion and Platform Competition

Hagiu, Andrei and Jullien, Bruno (2014) Search Diversion and Platform Competition. International Journal of Industrial Organization, vol.33. pp. 48-60.

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Official URL: http://tse-fr.eu/pub/28815

Abstract

Platforms use search diversion in order to trade off total consumer traffic for higher revenues derived by exposing consumers to unsolicited products (e.g. advertising). We show that competition between platforms leads to lower equilibrium levels of search diversion relative to a monopoly platform when the intensity of competition is high. On the other hand, if there is only mild competition, then competing platforms induce more search diversion relative to a platform monopolist. When platforms charge consumers fixed access fees, all equilibrium levels of search diversion under platform competition are equal to the monopoly level, irrespective of the nature of competition. Furthermore, relative to platforms that cannot charge such fees, platforms that charge positive (negative) access fees to consumers have weaker (stronger) incentives to divert search

Item Type: Article
Language: English
Date: March 2014
Refereed: Yes
Uncontrolled Keywords: Search-diversion, Two-sided markets, Competition, Advertising, Exclusivity
JEL codes: D4 - Market Structure and Pricing
L1 - Market Structure, Firm Strategy, and Market Performance
L5 - Regulation and Industrial Policy
Subjects: B- ECONOMIE ET FINANCE
Divisions: TSE-R (Toulouse)
Site: UT1
Date Deposited: 16 Mar 2015 14:53
Last Modified: 09 Apr 2018 12:14
OAI ID: oai:tse-fr.eu:28815
URI: http://publications.ut-capitole.fr/id/eprint/16639

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