Talking about Platforms Platform competition with Shiva Shekhar
Jan 17, 2024
Shiva Shekhar, an Assistant Professor at Tilburg School of Economics, dives into platform competition and strategies that shape market dynamics. He discusses the role of exclusivity in two-sided markets and how it can enhance welfare despite limiting rival options. Shiva shares insights on merging platforms with 'superstars' and its impact on pricing. He explores why firms might invite competitors and the complex bargaining dynamics among rising creators and their unions. Lastly, he highlights barriers traditional firms face when adopting platform thinking.
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When Exclusivity Can Help Platforms
- Exclusivity deals with superstars can increase overall welfare by triggering stronger cross‑side network effects.
- Aggregation of users and developers can outweigh harms to the rival platform when network effects are large.
Mergers Can Make Exclusivity Less Likely
- Vertical mergers between a platform and a superstar can reduce exclusivity, contrary to traditional foreclosure logic.
- The merged entity may internalize ancillary revenues and price more aggressively, making non‑exclusive deals attractive.
Plan Ahead For Rising Creators’ Power
- Monitor creators on your platform as they grow, because rising stars can gain bargaining power and threaten your control.
- Prepare strategic options like contractual clauses or migration strategies before a creator becomes dominant.