Creating platforms by hosting rivals

Hagiu, Andrei, Jullien, Bruno and Wright, Julian (2018) Creating platforms by hosting rivals. TSE Working Paper, n. 18-970, Toulouse

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Official URL: http://tse-fr.eu/pub/33123

Abstract

We explore conditions under which a multiproduct firm can profitably turn itself into a platform by "hosting rivals", i.e. by inviting rivals to sell products or services on top of its core product. Hosting eliminates the additional shopping costs to consumers of buying a specialist rival's competing version of the multiproduct firm's non-core product. On the one hand, this makes it easier for the rival to compete on the non-core product. On the other hand, hosting turns the rival from a pure competitor into a complementor: the value added by its product now helps raise consumer demand for the multi-product firm's core product. As a result, hosting can be both unilaterally profitable for the multi-product firm and jointly profitable for both firms.

Item Type: Monograph (Working Paper)
Language: English
Date: November 2018
Place of Publication: Toulouse
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)
Institution: Université Toulouse Capitole
Site: UT1
Date Deposited: 30 Nov 2018 09:15
Last Modified: 04 Apr 2019 04:06
OAI ID: oai:tse-fr.eu:33123
URI: http://publications.ut-capitole.fr/id/eprint/26529

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