Download This PaperDigital Platforms: Does Promoting Competitors Promote Competition?
61 Pages Posted: 21 Oct 2019
Date Written: April 17, 2019
Abstract
Digital platforms frequently refer their users to competitors. We show that these references induce a business-sharing effect that may relax competition for users, resulting in lower quality of content. More surprisingly, user surplus may also decrease as the quality effect may overwhelm the positive effect of accessing more content. In the media sector, newspapers delegate the referencing activity to independent third parties. We show that the fees charged by third parties mitigate the anti-competitive effect while preserving the diversity effect. When there is competition among third parties, interplatform references promote both the diversity and quality of content of digital industries.
Keywords: Two-sided markets, Platforms, Tacit collusion, Entry, Quality, Advertising
JEL Classification: D21, D43, L13, L41, L51, L52, L82, L86
Suggested Citation: Suggested Citation
Xavier Lambin (Contact Author)
ESSEC Business School ( email )
3 Avenue Bernard Hirsch
CS 50105 CERGY
CERGY, CERGY PONTOISE CEDEX 95021
France