Minjae Song, University of Rochester

Estimating Platform Market Power in Two-sided Markets

October 16, 2013 | 11:45am - 1:00pm | Cumnock 101B | Open to public

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​Abstract: In this paper I develop and estimate a structural model of platform demand in two-sided markets. My model and estimation procedure are applicable to general two-sided market settings where (1) agents on each side care about the presence of agents on the other side and (2) platforms charge access fees on both sides. Using data on TV magazines in Germany I show that the magazines typically set copy prices below marginal costs and make profits from selling advertising space. I also show that platform mergers are much less harmful to consumers (readers and advertisers) than in one-sided markets.