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/lp/de-gruyter/welfare-effects-of-socially-conscious-platforms-in-two-sided-markets-Xk6Fx00UF0
- Publisher
- de Gruyter
- Copyright
- © 2022 Walter de Gruyter GmbH, Berlin/Boston
- ISSN
- 1935-1682
- eISSN
- 1935-1682
- DOI
- 10.1515/bejeap-2022-0379
- Publisher site
- See Article on Publisher Site
Abstract
AbstractThis note presents a model of platform competition in a two-sided market, with one competing platform pursuing not only its own profit but also consumer surplus. We investigate how the presence of such a socially conscious platform affects market competition. Results indicate that greater emphasis as an objective put on consumer surplus by the socially conscious platform leads to higher market share. Creation of a larger network enhances the total benefits associated with indirect network externalities in the two-sided market. When the extent of indirect network externalities is sufficiently strong, increased network benefits can improve social welfare. By contrast, if indirect network externalities are weak, then the socially conscious platform might be detrimental to society.
Journal
The B.E. Journal of Economic Analysis & Policy – de Gruyter
Published: Jan 1, 2023
Keywords: two-sided platforms; mixed oligopoly; corporate social responsibility