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A search-matching model of the buyer-seller platforms

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  • Chen, Kong-Pin
  • Yen-Chi, Huang

Abstract

Based 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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File URL: http://mpra.ub.uni-muenchen.de/38372/
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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 38372.

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Date of creation: 12 Feb 2009
Date of revision: 14 Dec 2011
Handle: RePEc:pra:mprapa:38372

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Keywords: two-sided platform; fees; network externalities; subsudy;

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References

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  1. Andrea Galeotti & José Luis Moraga Gonzales, 2008. "Platform Intermediation in a Market for Differentiated Products," CESifo Working Paper Series 2266, CESifo Group Munich.
  2. Andrei Hagiu, 2009. "Two-Sided Platforms: Product Variety and Pricing Structures," Journal of Economics & Management Strategy, Wiley Blackwell, Wiley Blackwell, vol. 18(4), pages 1011-1043, December.
  3. Rochet, Jean Charles & Tirole, Jean, 2007. "Tying-in Two-Sided Markets and the Honour All Cards Rule," CEPR Discussion Papers, C.E.P.R. Discussion Papers 6132, C.E.P.R. Discussion Papers.
  4. Glenn Ellison & Drew Fudenberg & Markus Mobius, 2010. "Competing Auctions," Levine's Working Paper Archive 506439000000000092, David K. Levine.
  5. Attila Ambrus & Rossella Argenziano, 2009. "Asymmetric Networks in Two-Sided Markets," American Economic Journal: Microeconomics, American Economic Association, American Economic Association, vol. 1(1), pages 17-52, February.
  6. repec:rje:randje:v:37:y:2006:3:p:668-691 is not listed on IDEAS
  7. repec:rje:randje:v:37:y:2006:3:p:645-667 is not listed on IDEAS
  8. Marc Rysman, 2009. "The Economics of Two-Sided Markets," Journal of Economic Perspectives, American Economic Association, American Economic Association, vol. 23(3), pages 125-43, Summer.
  9. Fudenberg, Drew & Ellison, Glenn, 2003. "Knife-Edge or Plateau: When Do Market Models Tip?," Scholarly Articles 3160493, Harvard University Department of Economics.
  10. Marc Rysman, 2004. "Competition Between Networks: A Study of the Market for Yellow Pages," Review of Economic Studies, Oxford University Press, vol. 71(2), pages 483-512.
  11. Marc Rysman, 2004. "Competition Between Networks: A�Study of the Market for Yellow�Pages," Review of Economic Studies, Wiley Blackwell, Wiley Blackwell, vol. 71(2), pages 483-512, 04.
  12. Kenneth Burdett & Shouyong Shi & Randall Wright, 2001. "Pricing and Matching with Frictions," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 109(5), pages 1060-1085, October.
  13. Jean-Charles Rochet & Jean Triole, 2002. "Platform Competition in Two Sided Markets," FMG Discussion Papers, Financial Markets Group dp409, Financial Markets Group.
  14. Graeme Guthrie & Julian Wright, 2003. "Competing Payment Schemes," Departmental Working Papers, National University of Singapore, Department of Economics wp0311, National University of Singapore, Department of Economics.
  15. E. Glen Weyl, 2010. "A Price Theory of Multi-sided Platforms," American Economic Review, American Economic Association, American Economic Association, vol. 100(4), pages 1642-72, September.
  16. repec:hrv:faseco:4589709 is not listed on IDEAS
  17. Jullien, Bruno, 2008. "Price Skewness and Competition in Multi-Sided Markets," IDEI Working Papers, Institut d'Économie Industrielle (IDEI), Toulouse 504, Institut d'Économie Industrielle (IDEI), Toulouse.
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