This 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.
Funding source: Japan Society for the Promotion of Science
Award Identifier / Grant number: 20H01551
Award Identifier / Grant number: 22H00043
The authors are grateful to Editor-in-Chief Till Requate for his constructive comments.
Research funding: This work was partially supported by JSPS KAKENHI Grant Numbers 20H01551 and 22H00043. The usual disclaimers apply.
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