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**Vertical product differentiation and two-sided markets.**
*(English)*
Zbl 1292.91070

Summary: We model platform competition in a market where products are characterized by cross network externalities. Consumers differ in their valuation of these externalities. Although the exogenous set-up is entirely symmetric, we show that platform competition induces a vertical differentiation structure that allows for the co-existence of asymmetric platforms in equilibrium. We establish this result in two set-ups: in the first one platforms commit to prices, in the second one they commit to network sizes.

### MSC:

91B24 | Microeconomic theory (price theory and economic markets) |

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\textit{J. J. Gabszewicz} and \textit{X. Y. Wauthy}, Econ. Lett. 123, No. 1, 58--61 (2014; Zbl 1292.91070)

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### References:

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[3] | Katz, M.; Shapiro, J., Network externalities, competition and compatibility, Amer. Econ. Rev., 75, 3, 424-440 (1985) |

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[5] | Rochet, J.-C.; Tirole, J., Two-sided markets: a progress report, Rand J. Econ., 35, 3, 645-667 (2006) |

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