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Horizontal mergers between multisided platforms: Insights from Cournot competition
Author(s) -
CorreiadaSilva Joao,
Jullien Bruno,
Lefouili Yassine,
Pinho Joana
Publication year - 2019
Publication title -
journal of economics and management strategy
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.672
H-Index - 68
eISSN - 1530-9134
pISSN - 1058-6407
DOI - 10.1111/jems.12309
Subject(s) - cournot competition , homogeneous , competition (biology) , economics , industrial organization , welfare , bertrand competition , simple (philosophy) , microeconomics , oligopoly , physics , market economy , ecology , biology , philosophy , epistemology , thermodynamics
This paper discusses the literature on horizontal mergers between multisided platforms and argues that the Cournot model can provide useful insights into the welfare effects of such mergers. To illustrate those insights, we develop a simple model in which two‐sided platforms offer a homogeneous service and compete à la Cournot, and derive the effects of “average‐marginal‐cost‐preserving” mergers on consumers on both sides of the market. We conclude with a discussion of several research avenues that could be explored to understand better the impact of horizontal mergers between multisided platforms.