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Monopolistic Location Choice in Two-Sided Industries

Böhme, Enrico and Müller, Christopher (2012): Monopolistic Location Choice in Two-Sided Industries.

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Abstract

We analyze the optimal location choice of a monopolistic firm that operates two platforms on a two-sided market. We show that the optimal platform locations are equivalent to the one-sided benchmark if both sides are either restricted to single- or multi-homing. In the mixed case (one side single-homes, the other one multi-homes), the optimal platform locations are determined by the relative profitability of both market sides. Our results indicate that modeling mergers on two-sided markets with fixed locations is often inappropriate.

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