{"title":"Negative Intra Group Network Externalities in a Monopolistic Two-Sided Market","authors":"Gokce Kurucu","doi":"10.1515/rne-2017-0054","DOIUrl":null,"url":null,"abstract":"Abstract This paper analyzes the optimal market structures and pricing strategies of a monopolist platform in a two-sided market where the agents on each side prefer the platform to be less competitive on their side; that is, in a market with negative intra-group network externalities. Results show that the equilibrium market structure varies with the extent of negative intra-group network externalities. If the negative network externalities are substantial, that is, if an agent’s disutility due to a larger sized market on his side is high (enough), then the profit-maximizing strategy for the matchmaker will be to match the highest types of one side with all of the agents on the other side. In that case, the matchmaker will charge a high entrance fee from the former side and allow free entrance to the agents of the latter side. However, if the network externalities are not substantial, then the matchmaker will maximize profits by matching an equal number of agents from each side. This paper thus provides an explanation of the asymmetric pricing schedules in two-sided markets when the matchmaker uses a one-program pricing schedule.","PeriodicalId":45659,"journal":{"name":"Review of Network Economics","volume":"47 1","pages":"51 - 73"},"PeriodicalIF":0.9000,"publicationDate":"2018-06-26","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":"4","resultStr":null,"platform":"Semanticscholar","paperid":null,"PeriodicalName":"Review of Network Economics","FirstCategoryId":"96","ListUrlMain":"https://doi.org/10.1515/rne-2017-0054","RegionNum":4,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":null,"EPubDate":"","PubModel":"","JCR":"Q3","JCRName":"ECONOMICS","Score":null,"Total":0}
引用次数: 4
Abstract
Abstract This paper analyzes the optimal market structures and pricing strategies of a monopolist platform in a two-sided market where the agents on each side prefer the platform to be less competitive on their side; that is, in a market with negative intra-group network externalities. Results show that the equilibrium market structure varies with the extent of negative intra-group network externalities. If the negative network externalities are substantial, that is, if an agent’s disutility due to a larger sized market on his side is high (enough), then the profit-maximizing strategy for the matchmaker will be to match the highest types of one side with all of the agents on the other side. In that case, the matchmaker will charge a high entrance fee from the former side and allow free entrance to the agents of the latter side. However, if the network externalities are not substantial, then the matchmaker will maximize profits by matching an equal number of agents from each side. This paper thus provides an explanation of the asymmetric pricing schedules in two-sided markets when the matchmaker uses a one-program pricing schedule.
期刊介绍：
The Review of Network Economics seeks to help policy makers, academics, and practitioners keep informed of new research and policy debate in network economics and related subjects that are relevant to the study of network industries. By publishing high quality research on topical issues relevant to network industries, it is hoped readers will be able to gain a deeper understanding of the economic issues involved and that this will improve the quality of decision making by private and public organisations, and debate among researchers. The articles can cover specific network industries, or may deal with general issues that have relevance to a number of different network industries, including topics in the economics of networks, regulation, competition law, or industrial organisation. Papers that provide insights into policy debates are especially welcome, as are up-to-date surveys, book reviews, and comments.
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