Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/333764 
Year of Publication: 
2025
Series/Report no.: 
CESifo Working Paper No. 12218
Publisher: 
Munich Society for the Promotion of Economic Research - CESifo GmbH, Munich
Abstract: 
In many industries, platforms compete with incumbents that are open to all consumers, whereas platforms require user affiliation. Consequently, platforms face two layers of competition: for the market, to attract users, and in the market, to compete with incumbents. We develop a dynamic model integrating these layers, showing that as platform affiliation grows, in the market competition intensifies, pushing incumbents toward more aggressive pricing. Conversely, for the market competition diminishes, reducing the platform's incentive to compete aggressively. This interplay generates dynamic pricing behavior that can be non-monotonic over time, capturing the shifting incentives driving platform-incumbent competition across both dimensions.
Subjects: 
platform competition
Uber economy
competition for the market
market affiliation
JEL: 
L11
L13
Document Type: 
Working Paper
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