Working paper

Two-Sided Platforms and Biases in Technology Adoption

Jay Pil Choi, and Doh-Shin Jeon

Abstract

We investigate the relationship between market structure and platforms'incentives to adopt technological innovations in two-sided markets, where platforms may find it optimal to charge zero price on the consumer side and to extract surplus on the ad- vertising side. We consider innovations that a¤ect the two sides in an opposite way. We compare private incentives with social incentives and find that the bias in tech- nology adoption depends crucially on whether the non-negative pricing constraint binds or not. Our results provide a rationale for a tougher competition policy to curb concentration if competition authorities put more weight on consumer surplus in welfare calculations.

Keywords

Technology Adoption, Two-Sided Platforms, Non-Negative Pricing Constraint, Pass-through;

JEL codes

  • D4: Market Structure and Pricing
  • L1: Market Structure, Firm Strategy, and Market Performance
  • L5: Regulation and Industrial Policy

Reference

Jay Pil Choi, and Doh-Shin Jeon, Two-Sided Platforms and Biases in Technology Adoption, TSE Working Paper, n. 20-1143, September 2020.

See also

Published in

TSE Working Paper, n. 20-1143, September 2020