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Second-Degree Price Discrimination on Two-Sided Markets

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  • Böhme, Enrico

Abstract

The present paper provides a descriptive analysis of the second-degree price discrimination problem on a monopolistic two-sided market. By imposing a simple two-sided framework with two distinct types of agents on one of its market sides, it will be shown that under incomplete information, the extent of platform access for high-demand agents is strictly reduced below the benchmark level (complete information). In addition, the paper’s findings imply that it is feasible in the optimum to charge higher payments from low-demand agents if the extent of interaction with agents from the opposite market side is assumed to be bundle-specific.

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File URL: http://mpra.ub.uni-muenchen.de/40951/
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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 40951.

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Date of creation: 30 Aug 2012
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Handle: RePEc:pra:mprapa:40951

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Keywords: two-sided markets; second-degree price discrimination; monopoly;

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  1. repec:rje:randje:v:37:y:2006:3:p:645-667 is not listed on IDEAS
  2. Spulber Daniel F., 1993. "Monopoly Pricing," Journal of Economic Theory, Elsevier, vol. 59(1), pages 222-234, February.
  3. Eric Maskin & John Riley, 1984. "Monopoly with Incomplete Information," RAND Journal of Economics, The RAND Corporation, vol. 15(2), pages 171-196, Summer.
  4. Jean-Charles Rochet & Jean Tirole, 2003. "Platform Competition in Two-Sided Markets," Journal of the European Economic Association, MIT Press, vol. 1(4), pages 990-1029, 06.
  5. Peitz, Martin & Valletti, Tommaso M., 2008. "Content and advertising in the media: Pay-tv versus free-to-air," International Journal of Industrial Organization, Elsevier, vol. 26(4), pages 949-965, July.
  6. GABSZEWICZ, Jean J. & LAUSSEL, Didier & SONNAC, Nathalie, . "Programming and advertising competition in the broadcasting industry," CORE Discussion Papers RP -1873, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  7. Qihong Liu & Konstantinos Serfes, 2007. "Price Discrimination in Two-Sided Markets," Working Papers 07-25, NET Institute, revised Sep 2007.
  8. Stiglitz, Joseph E, 1977. "Monopoly, Non-linear Pricing and Imperfect Information: The Insurance Market," Review of Economic Studies, Wiley Blackwell, vol. 44(3), pages 407-30, October.
  9. Simon P. Anderson & Stephen Coate, 2003. "Market Provision of Broadcasting: A Welfare Analysis," Virginia Economics Online Papers 358, University of Virginia, Department of Economics.
  10. Esther Gal-Or & Anthony Dukes, 2003. "Minimum Differentiation in Commercial Media Markets," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 12(3), pages 291-325, 09.
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