Platform Competition as Network Contestability

Recent research in industrial organisation has investigated the essential place that middlemen have in the networks that make up our global economy. In this paper we a�empt to understand how such middlemen compete with each other through a game theoretic analysis using novel techniques from decision-making under ambiguity. We model a purposely abstract and reduced model of one middleman who provides a two-sided platform, mediating surplus-creating interactions between two users. �e middleman evaluates uncertain outcomes under positional ambiguity, taking into account the possibility of the emergence of an alternative middleman o�ering intermediary services to the two users. Surprisingly, we �nd many situations in which the middleman will purposely extract maximal gains from her position. Only if there is relatively low probability of devastating loss of business under competition, the middleman will adopt a more competitive a�itude and extract less from her position.