Monopolistic Location Choice in Two-Sided Industries

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

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.

• Item Type: MPRA Paper
• Language: English
• Keywords: two-sided markets; location choice; monopoly; merger simulation
• Subjects: K - Law and Economics > K2 - Regulation and Business Law > K20 - General; L - Industrial Organization > L5 - Regulation and Industrial Policy > L51 - Economics of Regulation; L - Industrial Organization > L1 - Market Structure, Firm Strategy, and Market Performance > L12 - Monopoly ; Monopolization Strategies; D - Microeconomics > D4 - Market Structure, Pricing, and Design > D42 - Monopoly

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