This influential paper by Caillaud and Jullien from 2003 examines imperfect price competition between intermediation service providers, with a particular focus on aspects relevant to informational intermediation on the Internet. The authors analyze three key elements: indirect network externalities, non-exclusive use of multiple intermediaries, and price discrimination based on user identity and behavior. Using a developed model, they explore how these factors influence market structures and pricing strategies in intermediation markets. Key findings include that both efficient and inefficient market structures can emerge in equilibrium. Additionally, intermediaries have incentives to offer non-exclusive services to moderate competition and exert market power. The study provides a detailed analysis of pricing and business strategies employed by intermediation service providers and has significantly contributed to understanding competition dynamics in digital intermediation services, making it foundational for research on two-sided markets and platform economics.

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