Working Papers

"Horizontal Mergers in Two-sided Markets" ( Job Market Paper)

This paper investigates horizontal mergers in a two-sided market between horizontally differentiated platforms. This paper provides a theoretical analysis of impacts on price and welfare based on merger cost savings and cross-group externalities. The paper points out that the existence of the cross-group externalities weakens the role of the strong cost savings plays in the price decline after the merger. Consumer welfare will increase even though the prices of the merged platform increase to some extent. If the platforms have different costs, a merger between the less efficient platforms can lead to higher consumer surplus than a merger between the more efficient platforms, but the latter generates higher social welfare.

"Product Differentiation in Two-sided Markets"

This paper analyzes endogenous horizontal product differentiation in two-sided markets with two platforms based on a two-stage Hotelling model. Cross-group externality is a significant characteristic of a two-sided market, that agents on one side value the numbers of agents on the other side in the platform. When all the agents are restricted to single-home, the platforms will choose maximal product differentiation in the equilibrium. Under the circumstance that one side is allowed to multi-home, when there exists one-side cross-group externality, the platforms will choose maximal product differentiation; when there exist two-sided cross group externalities, the platforms choose minimal product differentiation in the equilibrium.

"Hierarchical Stackelberg Model versus Cournot Model Equilibrium"

This paper considers a hierarchical Stackelberg oligopoly model that firms choose outputs sequentially with possibly heterogeneous firms. This paper focuses on the comparisons of the equilibrium outcomes between the Hierarchical Stackelberg model and the standard Cournot model with n firms. The results demonstrate that the equilibrium prices in the Hierarchical Stackelberg model with heterogeneous firms are lower; the total welfare loss relative to the social optimal situation with the most efficient entry order in the Hierarchical Stackelberg model is lower, and it is ambiguous for the comparison between the least efficient entry order in the Stackelberg and Cournot oligopoly.