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Revenue from matching platforms

Author

Listed:
  • Marx, Philip

    (Department of Economics, Louisiana State University)

  • Schummer, James

    (MEDS Dept, Kellogg School of Mgmt, Northwestern University)

Abstract

We consider the pricing problem of a platform that matches heterogeneous agents using match-contingent fees. Absent prices, agents on the short side of such markets capture relatively greater surplus than those on the long side (Ashlagi et al., 2017). Nevertheless we show that the platform need not bias its price allocation toward either side. With independently drawn preferences, optimal price allocation decisions are independent of market size or imbalance; furthermore, changes in the optimal price level move both sides' prices in the same direction. In contrast, preference homogeneity biases price allocation in a direction that depends on the form of homogeneity; furthermore, changes in market imbalance move both sides' prices in opposite directions. These effects arise due to the exclusivity of matchings in two-sided market settings.

Suggested Citation

  • Marx, Philip & Schummer, James, 2021. "Revenue from matching platforms," Theoretical Economics, Econometric Society, vol. 16(3), July.
    • Handle: RePEc:the:publsh:3665
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    File URL: http://econtheory.org/ojs/index.php/te/article/viewFile/20210799/31437/892
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    Citations

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    Cited by:

    1. Jan Frederic Nerbel & Markus Kreutzer, 2023. "Digital platform ecosystems in flux: From proprietary digital platforms to wide-spanning ecosystems," Electronic Markets, Springer;IIM University of St. Gallen, vol. 33(1), pages 1-20, December.
    2. Nick Arnosti, 2022. "A Continuum Model of Stable Matching With Finite Capacities," Papers 2205.12881, arXiv.org.
    3. Aoyagi, Masaki & Yoo, Seung Han, 2022. "Matching strategic agents on a two-sided platform," Games and Economic Behavior, Elsevier, vol. 135(C), pages 271-296.
    4. Masaki Aoyagi, 2022. "Many-to-Many Matching on a Skill-Sharing Platform," ISER Discussion Paper 1186, Institute of Social and Economic Research, Osaka University.

    More about this item

    Keywords

    Pricing; matching; platforms;
    All these keywords.

    JEL classification:

    • D40 - Microeconomics - - Market Structure, Pricing, and Design - - - General
    • C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory

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