A search-matching model of the buyer-seller platforms
AbstractBased on the frictional matching framework, the paper provides a theoretical model for a specic type of two-sided platform: The buyer- seller transaction platform. In the model, the number of participants and the source of network externalities are endogenously determined. The platform is shown to exhibit both positive cross-group and neg- ative within-group network externalities. The optimal pricing of the platform depends not only on the cost of providing service and the benets of the participants, but also on how the marginal entrant (ei- ther a buyer or a seller) aects the matching probability. Since the sellers can shift the burden of entry fee to the buyers, the platform never subsidizes the sellers.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 38372.
Date of creation: 12 Feb 2009
Date of revision: 14 Dec 2011
two-sided platform; fees; network externalities; subsudy;
Other versions of this item:
- Kong-Pin Chen & Yen-Chi Huang, 2012. "A Search-Matching Model of the Buyer--Seller Platforms," CESifo Economic Studies, CESifo, vol. 58(4), pages 626-649, December.
- L81 - Industrial Organization - - Industry Studies: Services - - - Retail and Wholesale Trade; e-Commerce
- D02 - Microeconomics - - General - - - Institutions: Design, Formation, and Operations
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