B2B Marketplaces: Emergence and Entry

Abstract

In a successive vertical oligopoly, a set of produce some input to be transformed into a final product by a set of buyers. On this two-sided market, a firm's profit increases with the number of firms of the other type and decreases with the number of firms of its own type. We examine the emergence or the entry of a new marketplace sponsored by a profit-maximizing intermediary who targets buyers and sellers in sequential way by setting membership fees (or subsidies).