Heinrich, Torsten and Gräbner, Claudius (2017): Beyond Equilibrium: Revisiting TwoSided Markets from an AgentBased Modeling Perspective.
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Abstract
Twosided markets are an important aspect of today's economies. Yet, the attention they have received in economic theory is limited, mainly due to methodological constraints of conventional approaches: twosided markets quickly lead to nontrivial dynamics that would require a computational approach, as analytical models quickly become intractable. One approach to this problem is to opt for models that operate on an aggregated level, abstracting from most of the (microlevel) causes of these nontrivial dynamics. Here we revisit a well known equilibrium model by Rochet and Tirole of twosided markets that has taken this approach. Analyzing the model from an agentbased perspective, however, reveals several inconsistencies and implicit assumptions of the original model. This, together with the highly implausible assumptions that are required to make the model analytically tractable, limits its explanatory power significantly and motivates an alternative approach. The agentbased model we propose allows us to study the phenomenon of twosided markets in a more realistic and adequate manner: Not only are we able to compare different decision making rules for the providers, we are also able to study situations with more than two providers. Thus, our model represents a first step towards a more realistic and policyrelevant study of twosided markets.
Item Type:  MPRA Paper 

Original Title:  Beyond Equilibrium: Revisiting TwoSided Markets from an AgentBased Modeling Perspective 
Language:  English 
Keywords:  Twosided markets; Network externalities; Agentbased modeling; Simulation; Heuristic decision making; Reinforcement learning; Satisficing; Differential evolution; Evolutionary economics; Market structure; IT economics; Equilibrium dynamics 
Subjects:  C  Mathematical and Quantitative Methods > C6  Mathematical Methods ; Programming Models ; Mathematical and Simulation Modeling > C61  Optimization Techniques ; Programming Models ; Dynamic Analysis C  Mathematical and Quantitative Methods > C6  Mathematical Methods ; Programming Models ; Mathematical and Simulation Modeling > C62  Existence and Stability Conditions of Equilibrium C  Mathematical and Quantitative Methods > C6  Mathematical Methods ; Programming Models ; Mathematical and Simulation Modeling > C63  Computational Techniques ; Simulation Modeling D  Microeconomics > D4  Market Structure, Pricing, and Design L  Industrial Organization > L1  Market Structure, Firm Strategy, and Market Performance > L14  Transactional Relationships ; Contracts and Reputation ; Networks L  Industrial Organization > L1  Market Structure, Firm Strategy, and Market Performance > L15  Information and Product Quality ; Standardization and Compatibility 
Item ID:  76425 
Depositing User:  Dr. Torsten Heinrich 
Date Deposited:  26 Jan 2017 13:15 
Last Modified:  26 Jan 2017 13:15 
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URI:  https://mpra.ub.unimuenchen.de/id/eprint/76425 
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Beyond Equilibrium: Revisiting TwoSided Markets from an AgentBased Modeling Perspective. (deposited 13 Nov 2015 06:26)

Beyond Equilibrium: Revisiting TwoSided Markets from an AgentBased Modeling Perspective. (deposited 15 Dec 2015 06:29)
 Beyond Equilibrium: Revisiting TwoSided Markets from an AgentBased Modeling Perspective. (deposited 26 Jan 2017 13:15) [Currently Displayed]

Beyond Equilibrium: Revisiting TwoSided Markets from an AgentBased Modeling Perspective. (deposited 15 Dec 2015 06:29)