Collusion in Two-Sided Markets

Lefouili, Yassine and Pinho, Joana (2018) Collusion in Two-Sided Markets. TSE Working Paper, n. 18-894, Toulouse

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Official URL: http://tse-fr.eu/pub/32485

Abstract

This paper explores the incentives for, and the effects of, collusion in prices between two-sided platforms. We characterize the most profitable sustainable agreement when platforms collude on both sides of the market and when they collude on a single side of the market. Under two-sided collusion, prices on both sides are higher than competitive prices, implying that agents on both sides become worse off as compared to the competitive outcome. An increase in cross-group externalities makes two-sided collusion harder to sustain, and reduces the harm from collusion suffered by the agents on a given side as long as the collusive price on that side is lower than the monopoly price. When platforms collude on a single side of the market, the price on the collusive side is lower (higher) than the competitive price if the magnitude of the cross-group externalities exerted on that side is sufficiently large (small). As a result, one-sided collusion may benefit the agents on the collusive side and harm the agents on the competitive side.

Item Type: Monograph (Working Paper)
Language: English
Date: February 2018
Place of Publication: Toulouse
Uncontrolled Keywords: Collusion, Two-sided markets, Cross-group externalities
JEL codes: D43 - Oligopoly and Other Forms of Market Imperfection
L41 - Monopolization; Horizontal Anticompetitive Practices
Subjects: B- ECONOMIE ET FINANCE
Divisions: TSE-R (Toulouse)
Institution: Université Toulouse 1 Capitole
Site: UT1
Date Deposited: 24 Apr 2018 11:10
Last Modified: 24 Jul 2018 12:31
OAI ID: oai:tse-fr.eu:32485
URI: http://publications.ut-capitole.fr/id/eprint/25859

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