Competition, bargaining power and pricing in two-sided markets.

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Presentation transcript:

Competition, bargaining power and pricing in two-sided markets. Wilko Bolt & Kimmo Somramäki Discussant: Marianne Verdier (ENST)

Main results of the paper Research question: How does the bargaining power in two-sided markets influence the outcome of platform competition? Results: Under competition between two symmetric platforms, the side that does not have any bargaining power bears all the costs if they are sufficiently low.

Discussion of the model Bargaining power versus market power? Bargaining power exogenous to the model. Assumption of homogenous bargaining power for each side of the market. Assumption of homogeneous platforms. Assumption of multihoming.

Application to payment systems Model for closed payment systems. Does not take into account the role of intermediaries (banks), which have also bargaining power. In payment systems, heterogeneous bargaining power on each side of the market. Multihoming is not always true.