Platform competition with common ownership

This paper investigates the allocative effects of platform competition with common ownership in two-sided markets. We find that when both sides singlehome, common ownership increases the consumer surplus for the side treated as a loss leader, but decreases the consumer surplus for the other side. When one side multihomes, common ownership does not affect the consumer surplus for the multihoming side, but decreases the consumer surplus for the singlehoming side. When we introduce demand expansion into the model, captive users may still benefit from common ownership if they are treated as a loss leader. We show that common ownership does not necessarily hurt all platform users by extending the canonical Armstrong model of platform competition.