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Controlling entry and platform fees best way to control market power
Tue, 19 Feb 2019 10:22:24 EST
Technological services can be strategic substitutes or complements in platform competition, new research from Cass Business School has found. The researchers found that platform free entry delivers a superior outcome in terms of liquidity and welfare compared to the case of an unregulated monopoly. However, this does not necessarily match the regulator's preferred outcome, as entering platforms fail to internalise the externalities they impose on traders and rivals. The authors recommend that controlling entry or—preferably—platform fees may serve as an instrument to further increase investors' welfare.
