Competing Matchmakers: An Experimental Analysis

Platform competition is ubiquitous, yet platform market structure is little understood. Theory models typically su¤er from equilibrium multiplicity— platforms might coexist or the market might tip to either platform. We use laboratory experiments to study the outcomes of platform competition. When platforms are primarily vertically di¤erentiated, we …nd that even when platform coexistence is theoretically possible, markets inevitably tip to the more e¢ cient platform. When platforms are primarily horizontally di¤erentiated, so there is no single e¢ cient platform, we …nd strong evidence of equilibrium coexistence. We thank Robin Chark and Eric Set for their excellent research assistance. We also thank Syed Nageeb Ali, Mark Armstrong, Vincent Crawford, Michael Ostrovsky, Lise Vesterlund as well as seminar participants at various venues. The …rst author gratefully acknowledges the …nancial support of Hong Kong Research Grants Council. The third author gratefully acknowledges the …nancial support of the National Science Foundation. Please direct all correspondence to John Morgan, [email protected].