A Note of Caution on Using Hotelling Models in Platform Markets

We study a Hotelling framework in which customers first pay a monopoly platform to enter the market before deciding between two competing services on opposite ends of a Hotelling line. This setup is common when modeling competition in Internet content provision. We find that standard taken-for-granted solution methods under full market coverage break down, and that in the unique full-coverage equilibrium, the competing service providers set substantially lower prices. Standard methods and prices are restored by giving service providers the first move

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Year of publication:	2018
Authors:	Jeitschko, Thomas D.
Other Persons:	Kim, Soo Jin (contributor) ; Yankelevich, Aleksandr (contributor)
Publisher:	[2018]: [S.l.] : SSRN
Subject:	Theorie \| Theory \| Hotelling-Modell \| Hotelling model \| Hotellerie \| Hotel industry \| Digitale Plattform \| Digital platform

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