scholarly journals A Dynamic Contest Model of Platform Competition in Two-Sided Markets

2021 ◽  
Vol 16 (6) ◽  
pp. 2091-2109
Author(s):  
Martin Grossmann ◽  
Markus Lang ◽  
Helmut M. Dietl
Keyword(s):  
Head Start ◽  
Cost Efficiency ◽  
Network Effects ◽  
Future Success ◽  
Technological Advantage ◽  
Market Dominance ◽  
Underlying Causes ◽  
Convex Costs ◽  
Carry Over ◽  
Two Sided Markets

This paper examines the dynamic competition between platform firms in two-sided markets with network externalities. In our model, two platforms compete with each other via a contest to dominate a certain market. If one platform wins the contest, it can serve the market for a certain duration as a monopolistic platform. Our paper shows that platform firms can compensate for cost disadvantages with network effects. A head start (e.g., technological advantage) does not guarantee future success for platform firms. Network effects and cost efficiency are decisive for future success. Interestingly, higher costs of a platform can induce higher platform profits in our dynamic model. Moreover, we find that a platform’s size and profit are not necessarily positively correlated. Our model also provides new insights with respect to the underlying causes for the emergence of market dominance. The combination of technological carry-over and network effects can explain a long-lasting dominance of a platform that benefits from a head start. The necessary preconditions for this emergence are convex costs, small network effects and high carry-over.

scholarly journals A sertéshústermelést és -fogyasztást befolyásoló tényezők

2019 ◽  
Vol 13 (1) ◽  
pp. 3-9 ◽  
Author(s):  
Zsolt Kőműves ◽  
Viktória Horváthné Petrás
Keyword(s):  
Food Processing ◽  
Cost Efficiency ◽  
Trade Unions ◽  
Arable Land ◽  
Market Price ◽  
Economic Market ◽  
The Past ◽  
The Social ◽  
Underlying Causes

The decrease in the number of pigs grew to a drastic proportion during the past few decades. before the change of the regime therewere approximately 10 million pigs counted, but today this number is slightly beyond 3 million. The decline in livestock has anegative effect on the competitive position of both this sector and that of other branches of industry as well weakening significantlythe economic importance of the sector. The underlying causes of the process leading to the decline are diverse. to reveal thesolution a versatile analysis of the economic situation is essential, which should be started in the first place by the examination ofthe factors defining the competitiveness of the pig sector. The aim of this work is to reveal and characterize the national capacities,the physical and biological, as well as the social, economic (market) and human factors pointing to the most important differencesat the same time. This study analyzes the efficiency of the chosen farms according to the size of plant, standard of production, technologyand capacity of maintenance. summarizing the farmers’ opinions and the data obtained, it can be stated that farmers in thecurrent situation are satisfied with the buying price as one of the most essential factors of production. however, they emphasizedthe role of prices as a factor of uncertainty. As a result of changing the out-of-date technology considerable improvement could beobserved in the natural indexes. Unfortunately, significant changes should be accomplished in the feasibility of support andfinancing investment. The strict environmental regulations of animal keeping make the operation of farms – mainly of those thatdo not possess arable land – more difficult. reforms would provide relief for the operating farms. The market price regulation ofthe alternative fodder and the existent substitute products could appear as a significant cost efficiency factor during production.Workers with unsuitable education – and often being incompetent –, trade unions operating as false organizations as well as thelack of cooperation with the food processing industry affect the sector sensitively.

scholarly journals MACROECONOMIC EFFECTS OF ENERGY PRICE SHOCKS ON THE BUSINESS CYCLE

2015 ◽  
Vol 20 (3) ◽  
pp. 623-642 ◽  
Author(s):  
Bao Tan Huynh
Keyword(s):  
Business Cycle ◽  
Energy Production ◽  
Energy Price ◽  
Price Shocks ◽  
Price Elasticities ◽  
Empirical Estimates ◽  
Underlying Causes ◽  
The Business Cycle ◽  
Convex Costs ◽  
Macro Variables

This paper proposes a framework of endogenous energy production with convex costs to investigate the general equilibrium effects of energy price shocks on the business cycle. This framework explicitly models the consumption of durables and nondurables and implements a high complementarity between energy and the usage of durables and capital. The model predicts energy price elasticities of various consumption variables that fall within reasonable agreement with empirical estimates. Convex costs in energy production produce energy price and energy supply dynamics that tallies well with empirical behavior. Our analysis confirms in a theoretical setting recent observations that not all energy price shocks are the same. They can be distinct in terms of energy price dynamics and impact on the business cycle, as well as energy price elasticities of various macro variables that can be useful indicators for their underlying causes.

scholarly journals Estimating Network Effects in Two-Sided Markets

2020 ◽  
Vol 37 (1) ◽  
pp. 12-38 ◽  
Author(s):  
Oliver Hinz ◽  
Thomas Otter ◽  
Bernd Skiera
Keyword(s):  
Network Effects ◽  
Two Sided Markets

Marktplätze und indirekte Netzwerkeffekte

2006 ◽  
Vol 7 (3) ◽  
pp. 317-333 ◽  
Author(s):  
Martin Peitz
Keyword(s):  
Real World ◽  
Competition Policy ◽  
Network Effects ◽  
Numerical Examples ◽  
Indirect Network Effects ◽  
World Markets ◽  
Two Sided Markets

AbstractThis paper reviews the nascent literature on „two-sided markets“ which can be characterized by two-sided indirect network effects. It presents key findings in this literature, derives some of them in numerical examples and discusses how these findings improve our understanding of real-world markets. It finally discusses some implications for competition policy.

scholarly journals Avoiding market dominance: product compatibility in markets with network effects

2009 ◽  
Vol 40 (3) ◽  
pp. 455-485 ◽  
Author(s):  
Jiawei Chen ◽  
Ulrich Doraszelski ◽  
Joseph E. Harrington, Jr.
Keyword(s):  
Network Effects ◽  
Market Dominance ◽  
Product Compatibility

scholarly journals A Contest Model of a Professional Sports League with Two-Sided Markets

2012 ◽  
Vol 232 (3) ◽  
Author(s):  
Helmut Dietl ◽  
Tobias Duschl ◽  
Egon Franck ◽  
Markus Lang
Keyword(s):  
Network Effects ◽  
Network Externalities ◽  
Team Sports ◽  
Professional Sports ◽  
Revenue Sharing ◽  
Market Potential ◽  
Competitive Balance ◽  
Professional Team Sports ◽  
Negative Effect ◽  
Two Sided Markets

SummaryThis paper develops a model of a professional sports league with network externalities by integrating the theory of two-sided markets into a two-stage contest model. In professional team sports, the competition of the clubs functions as a platform that enables sponsors to interact with fans. In these club-mediated interactions, positive network effects operate from the fan market to the sponsor market, while positive or negative network effects operate from the sponsor market to the fan market. We show that the size of these network effects determines the level of competitive balance within the league. If the market potential of the sponsors is small (large), competitive balance increases (decreases) with stronger combined network effects. We further deduce that clubs benefit from stronger combined network effects through higher profits and that network externalities can mitigate the negative effect of revenue sharing on competitive balance. Finally, we derive implications for improving competitive balance by taking advantage of network externalities. For example, our model suggests that an increase in the market potential of sponsors produces a more balanced league.

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