Two-sided Markets, Competitive Bottlenecks and Exclusive Contracts
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Multihoming is a costly endeavor for complementors; it requires compliance with technical specifications and esthetic standards unique to each platform.
“However, multihoming is a costly endeavor for complementors; it requires compliance with the technical specifications and esthetic standards unique to each platform (Armstrong and Wright 2007).”
From Smart Timing for Smart Products? Complementor Multihoming in Nascent Platform Markets (2026) · cites this paper as Armstrong and Wright 2007
Multihoming carries substantial costs for complementors, which must be weighed against the marginal benefits of joining yet another platform.
“Multihoming carries substantial costs for the complementors (Armstrong and Wright 2007) which must be weighed against the marginal benefits of joining yet another platform.”
From Smart Timing for Smart Products? Complementor Multihoming in Nascent Platform Markets (2026) · cites this paper as Armstrong and Wright 2007
Multihoming carries important costs for complementors which tend to increase with the technological distance between platforms and different versions of platform architecture.
“multihoming carries important costs for the complementors (Armstrong and Wright 2007) which tend to increase with the technological distance between platforms and different versions of platform architecture”
From Smart Timing for Smart Products? Complementor Multihoming in Nascent Platform Markets (2026) · cites this paper as Armstrong and Wright 2007
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Self-citationTwo-sided markets and price competition with multi-homing
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Competition in two-sided markets
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Platform Rules: Multi-Sided Platforms as Regulators
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“This assumption is implicit in the Hotelling model, variants of which are frequently used in the two-sided markets literature (Parker and Van Alstyne 2000a, Armstrong 2002, Rochet and Tirole 2003, Armstrong 2006, Armstrong and Wright 2007, Anderson and Coate 2005, Kaiser and Wright 2006).”
MethodPlatform Architecture and Quality Trade-offs of Multihoming Complements
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“Early theoretical studies (Armstrong 2006; Armstrong and Wright 2007; Caillaud and Jullien 2003; Rochet and Tirole 2003) focus on which side multihomes and who takes most of the surplus.”
BackgroundThe Antitrust Analysis of Multi-Sided Platform Businesses
Evans, D. S., & Schmalensee, R. (2013) · National Bureau of Economic Research · doi:10.3386/w18783 · Cited by 273 · see citing works
Two-Sided Markets: A Tentative Survey
Roson, R. (2005) · Review of Network Economics · doi:10.2202/1446-9022.1070 · Cited by 263 · see citing works
“More generally, the possibility of choosing between single and multihoming exacerbates the coordination problems faced by agents on both sides, thereby making the existence of multiple equilibria more likely (see, for example, Armstrong and Wright, 2004).”
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The evolution of platform business models: Exploring competitive battles in the world of platforms
Zhao, Y., von Delft, S., Morgan‐Thomas, A., & Buck, T. (2019) · Long Range Planning · doi:10.1016/j.lrp.2019.101892 · Cited by 247 · see citing works
The Debate on Net Neutrality: A Policy Perspective
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“(8) of Armstrong (2006) and assumption A3 of Armstrong and Wright (2007).”
BackgroundTYING IN TWO‐SIDED MARKETS WITH MULTI‐HOMING*
Choi, J. P. (2010) · Journal of Industrial Economics · doi:10.1111/j.1467-6451.2010.00426.x · Cited by 229 · see citing works
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“They provide a relational architecture of inter-firm collaboration that allows the clear division of roles and com-plementors' tasks across sectors, integrating their specialized modular contributions into a unified value network.”
BackgroundCompetition Between Two-Sided Platforms Under Demand and Supply Congestion Effects
Bernstein, F., DeCroix, G. A., & Keskin, N. B. (2020) · Manufacturing & Service Operations Management · doi:10.1287/msom.2020.0866 · Cited by 216 · see citing works
“Examples of this body of work include Caillaud and Jullien (2003), Rochet and Tirole (2003, 2006), Armstrong (2006), Hagiu (2006, 2009), Armstrong and Wright (2007), Ambrus and Argenziano (2009), and Choi (2010).”
BackgroundGovernment as a platform, orchestration, and public value creation: The Italian case
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“Caillaud and Jullien (2003), Rochet and Tirole (2006), Armstrong (2006), and Armstrong and Wright (2007) extended this literature by introducing a two-sided market framework.”
BackgroundPlatform competition: Who benefits from multihoming?
Belleflamme, P., & Peitz, M. (2018) · International Journal of Industrial Organization · doi:10.1016/j.ijindorg.2018.03.014 · Cited by 193 · see citing works
Information and two-sided platform profits
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“Comparing (14) with (4) and (7) yields:”
BackgroundMultihoming in Two-Sided Markets: An Empirical Inquiry in the Video Game Console Industry
Landsman, V., & Stremersch, S. (2011) · Journal of Marketing · doi:10.1509/jm.09.0199 · Cited by 214 · see citing works
“…a given platform—in a context in which the multihoming option exists, or in specific settings of platforms’ competitive strength and life-cycle stages (Armstrong and Wright 2007; Balto 1999; Carrillo and Tan 2006; Doganoglu and Wright 2010; Mantena, Sankaranarayanan, and Viswanathan 2007; Shapiro…”
BackgroundManaging Proprietary and Shared Platforms
Eisenmann, T. R. (2007) · California Management Review · doi:10.2307/41166455 · Cited by 196 · see citing works
The Impact of Consumer Multi-homing on Advertising Markets and Media Competition
Athey, S. C., Calvano, E., & Gans, J. S. (2016) · Management Science · doi:10.1287/mnsc.2016.2675 · Cited by 39 · see citing works
Guthrie, G., & Wright, J. (2007) · Journal of Industrial Economics · doi:10.1111/j.1467-6451.2007.00302.x · Cited by 167 · see citing works
Self-citationPlatform Pricing and Investment to Drive Third-Party Value Creation in Two-Sided Networks
Tan, B., Anderson, E. G., & PARKER, G. G. (2020) · Information Systems Research · doi:10.1287/isre.2019.0882 · Cited by 164 · see citing works
Price Coherence and Excessive Intermediation *
Edelman, B., & Wright, J. (2015) · The Quarterly Journal of Economics · doi:10.1093/qje/qjv018 · Cited by 154 · see citing works
“This leads to a competitive bottleneck equilibrium similar to that analyzed in Armstrong and Wright (2007).”
BackgroundResultSelf-citationFrenemies in Platform Markets: Heterogeneous Profit Foci as Drivers of Compatibility Decisions
Adner, R., Chen, J., & Zhu, F. (2019) · Management Science · doi:10.1287/mnsc.2019.3327 · Cited by 150 · see citing works
“, Caillaud and Jullien 2003, Rochet and Tirole 2003, Bhargava and Choudhary 2004, Hao et al. 2017). Many of the extant theoretical models focus on competition between symmetric platform firms. The few papers examining the competition between asymmetric platforms tend to focus on platform firms with very different busi…”
BackgroundInfluentialMarket power, competition and innovation in digital markets: A survey
Calvano, E., & Polo, M. (2020) · Information Economics and Policy · doi:10.1016/j.infoecopol.2020.100853 · Cited by 149 · see citing works
Development and competition of digital service platforms: A system dynamics approach
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Either or Both Competition: A “Two-Sided” Theory of Advertising with Overlapping Viewerships
Ambrus, A., Calvano, E., & Reisinger, M. (2016) · American Economic Journal Microeconomics · doi:10.1257/mic.20150019 · Cited by 139 · see citing works
“Loosely speaking, the numerator of (8) is a measure of the elasticity of duplication.”
Armstrong, M., & Wright, J. (2009) · The Economic Journal · doi:10.1111/j.1468-0297.2009.02276.x · Cited by 133 · see citing works
“See Armstrong (2006) and Armstrong and Wright (2007) for general analyses of competitive bottlenecks.”
InfluentialSelf-citationTying and freebies in two-sided markets
Amelio, A., & Jullien, B. (2012) · International Journal of Industrial Organization · doi:10.1016/j.ijindorg.2012.03.002 · Cited by 131 · see citing works
Platform Competition in Two-Sided Markets: The Case of Payment Networks
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Two-Sided Platform Competition in Sharing Economy
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Newspapers in Times of Low Advertising Revenues
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The Economics of Platforms: A Theory Guide for Competition Policy
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NEGATIVE INTRA‐GROUP EXTERNALITIES IN TWO‐SIDED MARKETS*
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One-side value-added service investment and pricing strategies for a two-sided platform
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“Following many existing studies (Anderson and Coate 2005; Armstrong 2006; Armstrong and Wright 2007; Anderson, Parker, and Tan 2013), we assume that both uk and fm are uniformly distributed over the interval [0, 1].”
MethodPlatform competition for advertisers and users in media markets
Reisinger, M. (2011) · International Journal of Industrial Organization · doi:10.1016/j.ijindorg.2011.10.002 · Cited by 117 · see citing works
Complementor competitive advantage: A framework for strategic decisions
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“Platform owners have traditionally used exclusive contracts that forbid multi-homing, in order to differentiate their platform ecosystem by locking in their affiliated agents, especially complementors (Armstrong & Wright, 2007).”
BackgroundCompetition and third-party platform-integration in ride-sourcing markets
Zhou, Y., Yang, H., Ke, J., Wang, H., & Li, X. (2021) · Transportation Research Part B Methodological · doi:10.1016/j.trb.2021.08.002 · Cited by 115 · see citing works
Media Platforms’ Content Provision Strategies and Sources of Profits
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“Many MSPs face multihoming on one or both sides (Armstrong and Wright 2007; Evans 2003).”
Kim, D.-H., Lee, H., & Kwak, J. (2017) · Research Policy · doi:10.1016/j.respol.2017.05.008 · Cited by 104 · see citing works
Li, H., & Zhu, F. (2020) · Management Science · doi:10.1287/mnsc.2020.3718 · Cited by 104 · see citing works
“First, the literature on multihoming usually abstracts from a platform’s role or assumes that it uses price as the only tool to influence multihoming (e.g., Rochet and Tirole 2003, 2006; Armstrong 2006; Armstrong and Wright 2007; Belleflamme and Peitz 2019; Liu et al. 2019; and Jeitschko and Tremblay 2020).”
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The Impact of the Internet on Advertising Markets for News Media
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Market dynamics and indirect network effects in electric vehicle diffusion
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“The relevant literature finds that it is determined by own-price and cross-price elasticity of demand [42], quality sensitivity [18], multihoming [50], and substitutable or complementary relationships between applications [51,52].”
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Wang, S., Chen, H., & Wu, D. (2017) · International Journal of Production Economics · doi:10.1016/j.ijpe.2017.10.031 · Cited by 85 · see citing works
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Two-sided markets, pricing, and network effects
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“among others, Armstrong (2006), Armstrong and Wright (2007) , Caillaud and Jullien (2003),”
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“For example, Parker and Van Alstyne (2005), Rochet and Tirole (2005), Armstrong and Wright (2007), and Bolt and Tieman (2006) examine how standard pricing policies should be restructured in the presence of two-sidedness, and Caillaud and Jullien (2003) study how pricing rules should change in a…”
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Information Management and Pricing in Platform Markets
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“The second term in (11) captures the extra benefit of cutting the price on side i that comes from the possibility of raising the price on side j as a result of attracting more agents from side i (see, e.”
BackgroundInfluentialPlatform intermediation in a market for differentiated products
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“Equations (3), (4), and (7) allow us to characterize the equilibria in the continuation game.”
Platform strategies and user stickiness in the online video industry
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A Leverage Theory of Tying in Two-Sided Markets with Nonnegative Price Constraints
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“This is because a high induces the monopolist to price more aggressively in the consumer market, providing more surplus to inframarginal consumers, which can be leveraged to attract all consumers in market B through network e¤ects (see the demand decomposition in (4)).”
BackgroundPLATFORM COMPETITION WITH ENDOGENOUS HOMING
Jeitschko, T. D., & Tremblay, M. J. (2020) · International Economic Review · doi:10.1111/iere.12457 · Cited by 66 · see citing works
Advertising or Freemium: The Impacts of Social Effects and Service Quality on Competing Platforms
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“Following the literature on network effects ([2], [3], [11], [36]), we use the rational/fulfilled expectations equilibrium concept, which means that the agents’ (i.”
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Platform Competition in Peer-to-Peer Lending Considering Risk Control Ability
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Two-part tariff competition between two-sided platforms
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Internet of things (IoT) platform competition: Consumer switching versus provider multihoming
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“In recent years, the idea of complementarity has received particular attention in the area of platform competition in two-sided markets, where platform owners are separate from the application developers (Rochet and Tirole 2003, Armstrong 2006, Armstrong and Wright 2007).”
BackgroundThe Advertising-Financed Business Model in Two-Sided Media Markets
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Thickness and Competition in Ride-Sharing MarketsPreprint
Nikzad, A. (2019) · SSRN Electronic Journal · doi:10.2139/ssrn.3065672 · Cited by 56 · see citing works
“[Armstrong and Wright 2007] argue that multi-homing users could result in “competitive bottlenecks” in a market and study exclusive deals for preventing multi-homing.”
BackgroundExclusive quality – Why exclusive distribution may benefit the TV-viewers
Stennek, J. (2013) · Information Economics and Policy · doi:10.1016/j.infoecopol.2013.11.002 · Cited by 55 · see citing works
The Literature Review of Platform Economy
Xue, C., Tian, W., & Zhao, X. (2020) · Scientific Programming · doi:10.1155/2020/8877128 · Cited by 59 · see citing works
“Hagiu and Wright [14] impose restrictions on two-sided markets: one is the direct trade between the sides of the market, and the other is that each side of the market is “affiliated” to the platform, with higher cost of leaving the platform.”
BackgroundInfluentialKyprianou, C. (2018) · Academy of Management Discoveries · doi:10.5465/amd.2017.0081 · Cited by 52 · see citing works
Platform Pricing with Strategic Buyers: The Impact of Future Production Cost
Lin, M. J., Pan, X. A., & Zheng, Q. (2020) · Production and Operations Management · doi:10.1111/poms.13157 · Cited by 52 · see citing works
“The sellers’ intrinsic benefit of joining the platform describes their valuation aside from that related to transacting with the buyer side (Armstrong and Wright 2007, Gold and Hogendorn 2016).”
BackgroundChung, H. D., Zhou, Y. M., & Ethiraj, S. K. (2023) · Management Science · doi:10.1287/mnsc.2023.4706 · Cited by 52 · see citing works
Vega, A., & Chiasson, M. (2019) · Journal of strategic information systems · doi:10.1016/j.jsis.2019.06.001 · Cited by 49 · see citing works
Kim, H. J., Kim, I., & Lee, H. (2015) · International Journal of Information Management · doi:10.1016/j.ijinfomgt.2015.09.002 · Cited by 50 · see citing works
Kim, D., & Lee, H. (2016) · International Journal of Information Management · doi:10.1016/j.ijinfomgt.2016.04.011 · Cited by 50 · see citing works
Market Power, Competition and Innovation in Digital Markets: A SurveyPreprint
Calvano, E., & Polo, M. (2019) · SSRN Electronic Journal · doi:10.2139/ssrn.3523611 · Cited by 50 · see citing works
Schmidt, J., & Foss, N. J. (2023) · Journal of Management · doi:10.1177/01492063231215023 · Cited by 50 · see citing works
“Exercising such governance capabilities implies acting as a “ club manager ” (Stabell & Fjeldstad, 1998: 427), which includes making decisions about access and excluding certain suppliers while possibly granting exclusivity to others (Armstrong & Wright, 2007; Cennamo & Santalo, 2013).”
The Economics of Interchange Fees and Their Regulation: An OverviewPreprint
Schmalensee, R., & Evans, D. S. (2005) · SSRN Electronic Journal · doi:10.2139/ssrn.744705 · Cited by 46 · see citing works
- Authors
- Armstrong, M., & Wright, J.
- Affiliations
- University College London (GB)
- National University of Singapore (SG)
- Corresponding author
- Wright, Julian
- Venue
- Economic Theory
- Published
- 2006-05-05
- Volume
- 32
- Issue
- 2
- Pages
- 353-380
- ISSN
- 0938-2259 (ISSN-L)
- 1432-0479
- OpenAlex
- W3124640067
- Cited by
- 690
- References
- 17
- Citations by year
- 2026: 27 · 2025: 41 · 2024: 49 · 2023: 61 · 2022: 69 · 2021: 45 · 2020: 54 · 2019: 44 · 2018: 50 · 2017: 26 · 2016: 24 · 2015: 23 · 2014: 15 · 2013: 39 · 2012: 22
- FWCI
- 62.96
- Type
- journal article
- Language
- en
- Open access
- green
- doi.org
- Locations
- Economic Theory (publishedVersion)
- SSRN Electronic Journal (acceptedVersion)
- Oxford University Research Archive (ORA) (University of Oxford) (acceptedVersion)
- National University of Singapore (submittedVersion)
- RePEc: Research Papers in Economics (submittedVersion)
- UCL Discovery (University College London) (submittedVersion)
- Topics
- Social Sciences › Business, Management and Accounting › Strategy and Management › Digital Platforms and Economics
- Social Sciences › Economics, Econometrics and Finance › Economics and Econometrics › Merger and Competition Analysis
- Social Sciences › Decision Sciences › Management Science and Operations Research › Auction Theory and Applications
- Keywords
- two-sided markets, exclusive contracts, product differentiation, platform competition, gains from trade, platform heterogeneity
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