TY - JOUR
T1 - Regulating Platform Competition in Markets with Network Externalities
T2 - Will Predatory Pricing Restrictions Increase Social Welfare?*
AU - Atad, Ohad
AU - Yehezkel, Yaron
N1 - Publisher Copyright:
© 2024 The Authors. The Journal of Industrial Economics published by The Editorial Board of The Journal of Industrial Economics and John Wiley & Sons Ltd.
PY - 2024/9
Y1 - 2024/9
N2 - We consider an infinitely repeated platform competition in a market with network externalities. The platform that dominated the market in the previous period becomes the incumbent in the current period. We examine the effect of an antitrust policy that prohibits both platforms (symmetric regulation), or just the incumbent (asymmetric regulation) from charging predatory prices. We show that symmetric regulation decreases consumer surplus and does not affect efficiency. Asymmetric regulation increases consumer surplus and improves welfare when the size of the market remains constant over time. Yet, when market size varies over time, this policy may lead to inefficient entry.
AB - We consider an infinitely repeated platform competition in a market with network externalities. The platform that dominated the market in the previous period becomes the incumbent in the current period. We examine the effect of an antitrust policy that prohibits both platforms (symmetric regulation), or just the incumbent (asymmetric regulation) from charging predatory prices. We show that symmetric regulation decreases consumer surplus and does not affect efficiency. Asymmetric regulation increases consumer surplus and improves welfare when the size of the market remains constant over time. Yet, when market size varies over time, this policy may lead to inefficient entry.
UR - http://www.scopus.com/inward/record.url?scp=85183885818&partnerID=8YFLogxK
U2 - 10.1111/joie.12385
DO - 10.1111/joie.12385
M3 - ???researchoutput.researchoutputtypes.contributiontojournal.article???
AN - SCOPUS:85183885818
SN - 0022-1821
VL - 72
SP - 1114
EP - 1138
JO - Journal of Industrial Economics
JF - Journal of Industrial Economics
IS - 3
ER -