Platforms Pricing Commitment and Variety in Two-Sided Markets

This book studies optimal pricing variety and commitment by plat­forms operating in markets which combine a two-sided structure with a vertical relationship. The first essay analyzes the choice of product variety by a two-sided sponsored platform. The second essay studies the existence of pure strategy symmetric price equilibria in a generalized version of Salop (1979)'s circular model of competition between differentiated products in which consumers are allowed to purchase more than one brand. The third and central chapter of my dissertation proposes a model of Bertrand competition between platforms and analyzes the sustainability of dominant platform equi­libria in two-sided markets with the following characteristics:i) platforms are essential bottlenecks for buyers to access the products offered by sellers; ii) sellers enter the market before buyers; iii) only sellers can multihome; iv) platforms can charge fixed fees on both sides and variable fees (royalties) to sellers. The most important issue arising in such a context is the ability of platforms to credibly commit to the price they will charge buyers when they set their prices for sellers.