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Armstrong meets Rochet–Tirole: On the equivalence of different pricing structures in two-sided markets

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  • Bajo-Buenestado, Raúl
  • Kinateder, Markus

Abstract

We formally show that lump-sum participation fees and per-interaction fees charged by a monopoly platform in a two-sided market are not interchangeable in the presence of price distortions, such as ad valorem taxes.

Suggested Citation

  • Bajo-Buenestado, Raúl & Kinateder, Markus, 2019. "Armstrong meets Rochet–Tirole: On the equivalence of different pricing structures in two-sided markets," Economics Letters, Elsevier, vol. 177(C), pages 43-46.
  • Handle: RePEc:eee:ecolet:v:177:y:2019:i:c:p:43-46
    DOI: 10.1016/j.econlet.2019.01.022
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    References listed on IDEAS

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    More about this item

    Keywords

    Two-sided market; Platform pricing; Pricing structure; Taxation; Price distortions;
    All these keywords.

    JEL classification:

    • D4 - Microeconomics - - Market Structure, Pricing, and Design
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L12 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Monopoly; Monopolization Strategies
    • H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General

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