We study price competition and entry of platforms in multi-sided markets. Utilizing the simplicity of the equilibrium pricing formula in our setting with heterogeneity of customers’ membership benefits, we demonstrate that in the presence of externalities, the standard effects of competition can be reversed: as platform competition increases, prices and platform profits can go up and consumer surplus can go down. We identify economic forces that jointly determine the social inefficiency of the free-entry equilibrium and provide conditions under which free entry is socially excessive as well as an example in which free entry is socially insufficient. JEL classification: L13, L4.

中文翻译：

---

多边市场竞争和进入的影响

我们研究价格竞争和平台进入多边市场。在我们的设置中利用均衡定价公式的简单性以及客户会员权益的异质性，我们证明了在存在外部性的情况下，竞争的标准效应可以逆转：随着平台竞争的增加，价格和平台利润可以上升，消费者剩余可以减少。我们确定了共同决定自由进入均衡的社会低效率的经济力量，并提供了自由进入在社会上过度的条件以及自由进入在社会上不足的例子。JEL 分类：L13、L4。