Formation, Competition, and Ownership of Internet Intermediaries

東京大学経済学研究科棟 3階 第3教室

大湾秀雄 氏
John M. Olin School of Business, Washington University

We analyze the formation and competition of market intermediaries when there are positive participation externalities between the two sides of the market and negative participation externalities within the same side. Registration with two intermediaries (i.e. multihoming) is allowed. There are two types of market intermediaries: one where multihoming always provides an additional benefit (additive type); and the other where connections with two intermediaries are substitutes (substitutable type). In the analyses of competition, we also consider three different ownership structures: third-party-owned (i.e. independent public exchange), buyer-owned (i.e. buy-side consortium exchange), and seller-owned. To deal with multiple equilibria, we assume that decisions made by potential participants are coordinated by a "pessimistic belief" about formation and entry of a new intermediary, and consider Stackleberg competition (i.e. there always are incumbent and entrant intermediaries) in the competition case.

Our primary results are as follows: first, we show that cross-subsidization is necessary to form a new intermediary even without competition because the pessimistic belief requires the intermediary owner to implement the desirable full participation outcome as the unique Nash equilibrium. Second, the incumbent can foreclose the entry of a third-party-owned intermediary if it is a substitutable type but cannot do so if it is an additive type. Third, the incumbent can deter the entry of a substitutable-type, seller-owned intermediary but make almost no profit by doing so, while the incumbent can never deter the entry of a substitutable-type, buyer-owned intermediary however small is the number of buyers participating in the consortium. Our work explains why independent public exchanges have been replaced by buy-side consortium exchanges in many industries in recent years.

備考: Microworkshop と共催