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Creating platforms by hosting rivals

Hagiu, Andrei, Jullien, Bruno and Wright, Julian (2020) Creating platforms by hosting rivals. Management Science, 66 (7). pp. 2801-3294.

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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: Article
Language: English
Date: July 2020
Refereed: Yes
Uncontrolled Keywords: multi-sided platforms, shopping costs, bundling, competition, complementarity.
JEL Classification: D4 - Market Structure and Pricing
L1 - Market Structure, Firm Strategy, and Market Performance
L5 - Regulation and Industrial Policy
Divisions: TSE-R (Toulouse)
Site: UT1
Date Deposited: 20 Apr 2020 13:09
Last Modified: 03 Sep 2020 13:21
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