On the Evolution of Market Institutions

The Platform Design Paradox

Bibliographic Data

ID9718229
AuthorsCarlos Alós-Ferrer (0000-0002-1668-9784, University of Konstanz), Carlos Alós‐Ferrer (University of Konstanz), Georg Kirchsteiger (ECARES, Universite Libre de Bruxelles), Markus Walzl (0000-0003-3732-7755, University of Bamberg)
Year2010
Volume120
Issue543
Pages215-243
Publication date2010-03-01
Peer ReviewedYes
Open AccessYes
TypeARTICLE
VenueThe Economic Journal (JOURNAL)
Journal identifiersISSN: 0013-0133 • E-ISSN: 1468-0297
PublisherOxford University Press (OUP) (PUBLISHER)
DOI10.1111/j.1468-0297.2009.02297.x
OpenAlexW2161823839
LanguageEN
Citations received2
References cited33

We study competition among market designers who create new trading platforms, when boundedly rational traders learn to select among them. We ask whether 'Walrasian' platforms, leading to market-clearing trading outcomes, will dominate the market in the long run. If several market designers compete, we find that traders learn to select non-market clearing platforms with prices systematically above the market-clearing level, provided at least one such platform is introduced by a market designer. This in turn leads market designers to introduce non-market clearing platforms. Hence platform competition induces non-competitive market outcomes. Copyright © The Author(s). Journal compilation © Royal Economic Society 2009

Economics · Neoclassical economics · Complex Systems and Time Series Analysis · Digital Platforms and Economics · Game Theory and Applications

Tools

Open DOISci-Hub