CoChat
Sign Up
Cited by 3,315Digital Platforms and EconomicsMerger and Competition AnalysisGame Theory and Voting Systems

Competition in two-sided markets

Open access
Armstrong, Mark·2006·The RAND Journal of Economics
DOI 10.1111/j.1756-2171.2006.tb00037.x
Open this paper in CoChat — free accountOpen PDF

Abstract

Many markets involve two groups of agents who interact via “platforms,“ where one group's benefit from joining a platform depends on the size of the other group that joins the platform. I present three models of such markets: a monopoly platform; a model of competing platforms where agents join a single platform; and a model of “competitive bottlenecks” where one group joins all platforms. The determinants of equilibrium prices are (i) the magnitude of the cross-group externalities, (ii) whether fees are levied on a lump-sum or per-transaction basis, and (iii) whether agents join one platform or several platforms.

The claims and statistics of this paper haven’t been checked yet.

Run the check — free, no account needed. It reads the open-access text and checks the sources it cites.

A few free checks a day · papers already verified open instantly · results are public

Integrity signals

Registry

Crossref · 10.1111/j.1756-2171.2006.tb00037.x

Cites

28 of 28 references verified0 citation errors · 0 not checkable

Statistics

Claims the paper makes

The claims and statistics of this paper haven’t been checked yet.

Run the check — free, no account needed. It reads the open-access text and checks the sources it cites.

A few free checks a day · papers already verified open instantly · results are public

Claims other papers make about this one

Each is checked against this paper’s own text: does it say what the citing paper says it does?

  • In Armstrong (2006), platforms have incentives to form 'competitive bottlenecks' to attract exclusive users on the more elastic side of the market and charge monopoly rents to the less elastic side.

    “in Armstrong (2006), platforms have incentives to form 'competitive bottlenecks' to attract exclusive users on the more elastic side of the market and charge monopoly rents to the less elastic side of the market”

    From Buy Now, Pay Later Credit: User Characteristics and Effects on Spending Patterns (2022) · cites this paper as Armstrong (2006)

    Section 5, “Competitive bottlenecks” (page unavailable), describes platforms competing for single-homing users while exercising local monopoly power over access to them and charging high prices to the multi-homing side. It does not identify those sides as respectively more and less price-elastic, and its model assumes single-homing rather than showing that platforms have an incentive to create it. (LLM, conf=0.86)

    Experimental — accuracy not yet measured

  • BNPL platforms have incentives to aggressively compete to attract users and design products to increase purchase volumes.

    “these results imply that BNPL platforms have incentives to aggressively compete to both (i) attract users and (ii) design their products in a way to increase purchase volumes as much as possible”

    From Buy Now, Pay Later Credit: User Characteristics and Effects on Spending Patterns (2022) · cites this paper as Armstrong (2006)

    The Introduction (page not given) says platforms may target one group aggressively and that cross-group effects intensify competition, supporting the incentive to compete for users. The cited passages do not address BNPL specifically or establish an incentive to design products to maximize purchase volumes. (LLM, conf=0.83)

    Experimental — accuracy not yet measured

  • Two-sided markets often seem to evolve toward a situation where members of one side use a single platform and the other side uses multiple platforms.

    “In fact, two-sided markets often seem to evolve toward to a situation where members of one side use a single platform and the other side uses multiple platforms; Armstrong (2006, Section 5) makes this point and provides formal analysis.”

    From The Economics of Two-Sided Markets (2009) · cites this paper as Armstrong (2006, Section 5)

    Section 5, “Competitive bottlenecks” (page unavailable), formally analyzes a market in which one group uses a single platform and the other uses multiple platforms. The discussion preceding Section 5 says several important markets resemble this configuration. The paper does not establish that markets evolve toward it over time. (LLM, conf=0.83)

    Experimental — accuracy not yet measured

  • Firms compete aggressively on the side that uses a single network in order to charge monopoly prices to the other side that is trying to reach them.

    “Hence, firms compete aggressively on the side that uses a single network in order to charge monopoly prices to the other side that is trying to reach them (Armstrong, 2006).”

    From The Economics of Two-Sided Markets (2009) · cites this paper as Armstrong, 2006

  • The platform acts as an intermediary or facilitator orchestrating transactions between the two groups.

    “The platform acts as an intermediary or facilitator orchestrating transactions between the two groups (Armstrong, 2006;Boudreau & Hagiu, 2009;Eisenmann et al., 2006;Rochet & Tirole, 2006).”

    From Digital platform ecosystems in flux: From proprietary digital platforms to wide-spanning ecosystems (2023) · cites this paper as Armstrong, 2006

Self-check

Percentages, sums and reported differences re-computed from the paper’s own numbers.

The self-check needs the paper’s full text.

Cites

Flagged first, then by citations

Research works printed but not linked: 1

  1. van Raalte, C. and Webers, H. "Spatial Competition with Intermediated Matching." Journal of Economic Behavior and Organization, Vol. 34 (1998), pp. 477-488.

Cited by

Sorted by citations

Related

Authors
Armstrong, M.
Affiliations
University College London (GB)
Corresponding author
Armstrong, Mark
ORCID
Armstrong, Mark
Venue
The RAND Journal of Economics
Publisher
Wiley
Published
2006-09
Volume
37
Issue
3
Pages
668-691
ISSN
  • 0741-6261 (ISSN-L)
  • 1756-2171
DOI
10.1111/j.1756-2171.2006.tb00037.x
OpenAlex
W2169544344
Cited by
3,315
References
28
Citations by year
2026: 205 · 2025: 201 · 2024: 180 · 2023: 225 · 2022: 222 · 2021: 202 · 2020: 222 · 2019: 210 · 2018: 206 · 2017: 166 · 2016: 144 · 2015: 141 · 2014: 125 · 2013: 127 · 2012: 141
FWCI
312.88
Type
journal article
Language
en
Open access
Licence
doi.wiley.com/10.1002/tdm_license_1.1 (tdm, 3287 d)
Locations
  • The RAND Journal of Economics (publishedVersion)
  • Oxford University Research Archive (ORA) (University of Oxford) (acceptedVersion)
  • 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 › Economics, Econometrics and Finance › Economics and Econometrics › Game Theory and Voting Systems
Keywords
two-sided markets, platforms, platform competition, lump-sum fees, equilibrium prices, platform size

About these checks

Registry, retraction, Cites and statistics results are computed, not judged, with one exception: a printed reference that no index lists is read once by a model before it counts as a citation error. Claims are extracted by a model and kept only when their quote appears verbatim in the text; each cited source is then checked, with a model’s help, for whether it says what the claim relies on. Those verdicts can be wrong — read the claim’s quote and the cited source before relying on one.

Statistics and arithmetic are recomputed, not judged.

Confidence bands are shown only for fields calibrated on our annotated test set. None is calibrated yet, so no band is shown.

What counts as a claim ›How we measure confidence ›How we check this ›

Are you an author, or do you see a problem with this page? Request a review