scholarly journals Market Definition in the Platform Economy

2021 ◽  
pp. 1-37
Author(s):  
Jens-Uwe FRANCK ◽  
Martin PEITZ
Keyword(s):  
Network Effects ◽  
Current Practice ◽  
Single Market ◽  
Market Definition ◽  
Market Participants ◽  
Market Linkages ◽  
Homing Behaviour ◽  
Economic Forces ◽  
Platform Economy

Abstract The article addresses the role market definition can play for EU competition practice in the platform economy. The focus is on intermediaries that bring together groups of users whose decisions are interdependent, which therefore are commonly referred to as ‘two-sided platforms’. We address challenges to market definition that accompany these cross-group network effects, assess current practice in a number of competition cases, and provide guidance for adapting practice to properly account for the economic forces shaping markets with two-sided platforms. We ask whether and when a single market can be defined that encompasses both sides. We advocate a multi-markets approach that takes account of cross-market linkages, acknowledges the existence of zero-price markets, and properly accounts for the homing behaviour of market participants.

scholarly journals Market Definition in the Platform Economy

2021 ◽  
Author(s):  
Jens-Uwe Franck ◽  
Martin Peitz
Keyword(s):  
Market Definition ◽  
Platform Economy

Payment Systems as a Driver for Platform Growth in E-Commerce

2022 ◽  
pp. 299-323
Author(s):  
Carin Rehncrona
Keyword(s):  
Business Model ◽  
Value Creation ◽  
Service Provider ◽  
Network Effects ◽  
Business Models ◽  
Network Externalities ◽  
Network Economics ◽  
Payment Systems ◽  
Service Ecosystem ◽  
Platform Economy

This chapter visits some of the fundamental concepts from platform economics, network effects, and network externalities. Further on, it discusses definitions of two-sided and multi-sided markets, how they are treated as business models. These concepts are further compared to the concept service ecosystem. A case of a payment service provider whose business model contributes to the growth of e-commerce is included. The purpose is to tease out how research on platforms has developed since e-commerce was in its infancy. The fundamental concepts developed in network economics are still valid and have been translated into different fields with a focus on value creation, information, and interaction. How platforms within platforms spur each other's growth is an area that has the potential to reach new insights on the platform economy.

scholarly journals Negotiating strategy: importance of the market definition

2019 ◽  
Author(s):  
Kęstutis Peleckis ◽  
Valentina Peleckienė ◽  
Kestutis Peleckis ◽  
Edita Leonavičienė
Keyword(s):  
Market Competition ◽  
Theory And Practice ◽  
Business Strategies ◽  
Market Definition ◽  
Negative Consequences ◽  
Negotiation Strategies ◽  
Market Participants ◽  
The Face ◽  
Business Negotiations ◽  
Practical Implications

Purpose – the purpose of the article is to examine how the extent of competition in the market affects the balance of bargaining powers of market participants. This often results in negative consequences for both buyers and suppliers. This study has important theoretical and practical implications. The authors made an analysis of existing theory and practice on negotiation strategies in a complex way, in accordance with levels of competition. Paper reveals the opportunities to develop and implement these strategies, taking into account market definition options. Research methodology – the paper examines the application of Nash equilibrium to the preparation of negotiation strategies, looking at the function for the best result. The study would help to prepare business strategies for different competition levels. Findings – the ways of preparation of negotiation strategies with different levels of competition, focusing on market definition opportunities. Research limitations – there are not enough measures in international business negotiation theory helping to develop negotiation strategies in the face of distorted market competition and difficulties to define the market. Practical implications – findings of the article will give opportunities for policymakers to develop and implement strategies for business negotiations. Originality – the article consists presentation of new tools for negotiators in preparing negotiating strategies.

Duopoly Competition with Network Effects in Discrete Choice Models

2021 ◽  
Vol 69 (2) ◽  
pp. 545-559 ◽  
Author(s):  
Ningyuan Chen ◽  
Ying-Ju Chen
Keyword(s):  
Theoretical Analysis ◽  
Market Structure ◽  
Market Power ◽  
Discrete Choice ◽  
Network Effects ◽  
Discrete Choice Models ◽  
Market Participants ◽  
Market Shares ◽  
Long Time ◽  
Antitrust Legislation

It has been realized for a long time that network effects play an important role in how market participants compete with each other. Arguably, companies like Facebook and Google are able to gain immense market power by leveraging the network effects of their consumers, despite potential competitors. This paper investigates how the dynamics play out in duopoly competition. We find that when the network effects per unit of consumption are weak, the competitors can co-exist and gain even market shares. As network effects become stronger, it is unstable, and even impossible, for the firms to coexist, and one firm emerges victorious, taking the majority of the market. The study provides a theoretical analysis for commonly observed market phenomena. It may also have implications for antitrust legislation: Special policies need to be created to maintain a competitive market structure for products and services with strong network effects.

TRANSACTION VERSUS NON-TRANSACTION PLATFORMS: A FALSE DICHOTOMY IN TWO-SIDED MARKET DEFINITION

2019 ◽  
Vol 15 (2-3) ◽  
pp. 327-357 ◽  
Author(s):  
Gunnar Niels
Keyword(s):  
Supreme Court ◽  
Single Market ◽  
Market Definition ◽  
Theoretical Underpinning ◽  
Price Elasticities ◽  
False Dichotomy ◽  
The Us ◽  
Policy Suggestions ◽  
Us Supreme Court ◽  
Two Sided Markets

Abstract When it comes to market definition in two-sided markets, an idea that has gained traction—among academics, competition authorities and even the US Supreme Court—is the distinction between transaction and non-transaction platforms. However, this distinction has no theoretical underpinning in the context of the hypothetical monopolist test (HMT). The hypothetical monopolist sets profit-maximising prices on both sides, as a function of own-price elasticities and externalities between the sides, regardless of whether the platform is transaction or non-transaction. I address the various theoretical and practical arguments put forward in support of the distinction between transaction and non-transaction and explain why none of these justify a different approach to market definition. I also discuss why some of the policy suggestions made by proponents of the distinction—for example, that a single market should be defined for transaction platforms but separate markets for non-transaction platforms—reflect some confusion about how the HMT works.

scholarly journals Research on the impact of digital platforms on the business model of an organization

E-Management ◽  
2021 ◽  
Vol 4 (1) ◽  
pp. 48-57
Author(s):  
A. A. Dashkov ◽  
E. S. Chernikova
Keyword(s):  
Decision Making ◽  
Information Technology ◽  
Human Capital ◽  
Business Model ◽  
Human Factor ◽  
Digital Platforms ◽  
Market Participants ◽  
Consumer Value ◽  
The Impact ◽  
Platform Economy

The area of research presented in the article are digital platforms. The platform approach, the platform economy, which primarily ensures the interaction of market participants, is gaining an increasing number of participants and is becoming more widespread in various industries: from trade to the hotel business and education.The article analyses the impact of the platform approach on the business model of the organization, namely, on the ability to create consumer value and deliver it to its customers, using the advantages of this approach. The ongoing transformation is more based on information technology, human capital, analytical decision-making tools, and business process flexibility. The paper also analyses the experience related to the implementation of the platforms in various countries and organizations.The study gives a possible business model of a platform organization and a University that has implemented platform solutions. The authors note that the mistakes made during the implementation of the platform are mostly due to the human factor: employees may not be ready for changes or are not technically educated enough. The indifference of managers also plays a role, because the risks arising from this are neutralized worse than others. To reduce the risks, the authors defined the directions of further research.

scholarly journals The Qwerty Phenomenon: Its Relevance in a World with Creative Destruction

2017 ◽  
Vol 10 (2) ◽  
pp. 177-203
Author(s):  
Jens Weghake ◽  
Fabian Grabicki
Keyword(s):  
Network Effects ◽  
Business Models ◽  
Creative Destruction ◽  
Status Quo ◽  
Major Influence ◽  
High Tech ◽  
Market Participants ◽  
New Business ◽  
The Status ◽  
Pure Moment

AbstractDoes quality always win? Looking at the critical drivers of success in and efficiency of high-tech markets, two contrasting perspectives exist in the academic sector. One camp argues that the higher quality of a product or service exerts a major influence on its market success. Consequently, an inferior market player should not persist. The opposite group emphasises the importance of network effects, which can lead to lock-ins in inferior situations or being stuck in a bad equilibria accordingly, also known as the QWERTY phenomenon. In this paper, we investigate this debate. We demonstrate that the missing consideration of the status quo bias in previous studies leads to the rejection of the QWERTY phenomenon, which means that independent of the quality offered by a business or service the pure moment of who reaches the customer first, establishes a status quo from which it is hardly possible to escape. We give several examples with inferior market leaders. We suggest that this phenomenon causes only temporary harm, and lock-ins could be overcome by Schumpeterian creative destruction. Therefore, we claim that even if lock-ins exist, they pose no problems as innovative market participants have the opportunity to introduce new business models.

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