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Cited by 1,799Digital Platforms and EconomicsMerger and Competition AnalysisICT Impact and Policies

Chicken & Egg: Competition among Intermediation Service Providers

Caillaud, Bernard, Jullien, Bruno·2003·The RAND Journal of Economics
DOI 10.2307/1593720
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Abstract

We analyze a model of imperfect price competition between intermediation service providers. We insist on features that are relevant for informational intermediation via the Internet: the presence of indirect network externalities, the possibility of using the nonexclusive services of several intermediaries, and the widespread practice of price discrimination based on users' identity and on usage. Efficient market structures emerge in equilibrium, as well as some specific form of inefficient structures. Intermediaries have incentives to propose non-exclusive services, as this moderates competition and allows them to exert market power. We analyze in detail the pricing and business strategies followed by intermediation services providers. Copyright 2003 by the RAND Corporation.

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Crossref · 10.2307/1593720

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16 of 16 references verified0 citation errors · 0 not checkable

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  • Caillaud and Jullien (2003) show how an entering platform can use price discrimination to be successful even when market participants expect the entrant to fail.

    “Caillaud and Jullien (2003) show how an entering platform can use price discrimination to be successful even when market participants expect the entrant to fail.”

    From The Economics of Two-Sided Markets (2009) · cites this paper as Caillaud and Jullien (2003)

  • In the first stage, the firm is challenged to attract a viable number of users on the respective sides of the platform to overcome the chicken and egg problem.

    “It is also challenged to attract a viable number of users on the respective sides of the platform to overcome the chicken and egg problem (Caillaud & Jullien, 2003).”

    From Digital platform ecosystems in flux: From proprietary digital platforms to wide-spanning ecosystems (2023) · cites this paper as Caillaud & Jullien, 2003

  • In many platforms, at least one side of the platform must be subsidized to overcome the chicken and egg problem and enable growth and subsequent adoption on the other side.

    “In many platforms, at least one side of the platform must be subsidized to overcome the chicken and egg problem (Caillaud & Jullien, 2003;Hagiu, 2006) and enable growth and subsequent adoption on the other side.”

    From Digital platform ecosystems in flux: From proprietary digital platforms to wide-spanning ecosystems (2023) · cites this paper as Caillaud & Jullien, 2003

  • During digital platform formation, the focal platform firm focuses on establishing a platform-based product or service, creating fundamental technologies, and attracting users on various sides of the platform.

    “During digital platform formation, the focal platform firm focuses on establishing a platform-based product or service, creating fundamental technologies, and attracting users on various sides of the platform (Caillaud & Jullien, 2003;Hagiu, 2006).”

    From Digital platform ecosystems in flux: From proprietary digital platforms to wide-spanning ecosystems (2023) · cites this paper as Caillaud & Jullien, 2003

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Authors
Caillaud, B., & Jullien, B.
Affiliations
École nationale des ponts et chaussées (FR)
ORCID
Jullien, Bruno
Venue
The RAND Journal of Economics
Publisher
Wiley
Published
2003
Volume
34
Issue
2
Pages
309
ISSN
0741-6261 (ISSN-L)
DOI
10.2307/1593720
OpenAlex
W2008975493
Cited by
1,799
References
17
Citations by year
2026: 74 · 2025: 110 · 2024: 97 · 2023: 107 · 2022: 113 · 2021: 119 · 2020: 143 · 2019: 108 · 2018: 106 · 2017: 59 · 2016: 79 · 2015: 75 · 2014: 80 · 2013: 88 · 2012: 74
FWCI
96.33
Type
journal article
Language
en
Open access
closed
Licence
doi.wiley.com/10.1002/tdm_license_1 (tdm, 4626 d)
Locations
The RAND Journal of Economics (publishedVersion)
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
  • Physical Sciences › Engineering › Media Technology › ICT Impact and Policies
Keywords
price competition, indirect network externalities, price discrimination, market power, market structure, pricing strategy, business strategy

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