Kind, Hans Jarle () (Dept. of Economics, Norwegian School of Economics and Business Administration) Koethenbuerger, Marko () (Center for Economic Studies, Ludwig-Maximilians-Universität) Schjelderup, Guttorm () (Dept. of Finance and Management Science, Norwegian School of Economics and Business Administration)
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Two-sided platform firms serve distinct customer groups that are connected through interdependent demand, and include major businesses such as the media industry, banking, and the software industry. A well known textbook result in one-sided markets is that a government may increase a monopolist’s output and reduce the deadweight loss by subsidizing output. The present paper shows that this result need not hold in a two-sided market. On the contrary, a higher advalorem tax rate - rather than a subsidy - could increase output and enhance welfare.
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Paper provided by Department of Finance and Management Science, Norwegian School of Economics and Business Administration in its series Discussion Papers with number
2007/3.
Length: 31 pages Date of creation: 13 Feb 2007 Date of revision: Handle: RePEc:hhs:nhhfms:2007_003
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Kind, Hans Jarle & Koethenbuerger, Marko & Schjelderup, Guttorm, 2008.
"Efficiency Enhancing Taxation in Two-sided Markets,"
Discussion Papers
2008/1, Department of Finance and Management Science, Norwegian School of Economics and Business Administration.
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