Antitrust & Competition Policy Blog

Editor: D. Daniel Sokol
University of Florida
Levin College of Law

Monday, September 14, 2020

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

https://lawprofessors.typepad.com/antitrustprof_blog/2020/09/horizontal-mergers-on-platform-markets-cost-savings-v-cross-group-network-effects.html

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