Horizontal mergers on platform markets: cost savings v. cross-group network effects?

Horizontal mergers on platform markets: cost savings v. cross-group network effects?

By:	Baranes, Edmond; Cortade, Thomas; Cosnita-Langlais, Andreea
Abstract:	We study the impact of cost savings on the outcome of horizontal mergers between two-sided platforms. We consider four symmetrically differentiated platforms located equidistantly on the unit circle and competing in membership fees. Users on both sides single-home, and we allow for both positive and negative cross-group externalities. We find that the impact of merger cost savings on prices is generally not monotonic, and that synergies are necessary for horizontal platform mergers to be Pareto-improving. Furthermore, the merger may benefit users on one side while harming users on the opposite side, which raises some interesting questions for the enforcement of merger control on two-sided markets.
URL:	http://d.repec.org/n?u=RePEc:pra:mprapa:97459&r=com