Monopolistic Location Choice in Two-Sided Industries

Posted by D. Daniel Sokol

Enrico Bohme, Christopher Muller (both Johann Wolfgang Goethe-University) discuss Monopolistic Location Choice in Two-Sided Industries.

ABSTRACT: We analyze the optimal location choice of a monopolistic firm that operates two platforms on a two-sided market. We show that the optimal platform locations are equivalent to the onesided benchmark if both sides are either restricted to single- or multi-homing. In the mixed case (one side single-homes, the other one multi-homes), the optimal platform locations are determined by the relative profitability of both market sides. Our results indicate that modeling mergers on two-sided markets with fixed locations is often inappropriate.