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Two-sided markets, pricing, and network effects

Author

Listed:
  • Bruno Jullien

    (TSE-R - Toulouse School of Economics - UT Capitole - Université Toulouse Capitole - Comue de Toulouse - Communauté d'universités et établissements de Toulouse - EHESS - École des hautes études en sciences sociales - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement)

  • Alessandro Pavan

    (Northwestern University [Evanston], CEPR - Center for Economic Policy Research)

  • Marc Rysman

    (BU - Boston University [Boston])

Abstract

The chapter has ten sections, which cover the theory of two-sided markets and related empirical work. Section 1 introduces the reader to the literature. Section 2 covers the case of markets dominated by a single monopolistic firm. Section 3 discusses the theoretical literature on competition for the market, focusing on pricing strategies that firms may follow to prevent entry. Section 4 discusses pricing in markets in which multiple platforms are active and serve both sides. Section 5 presents alternative models of platform competition. Section 6 discusses richer matching protocols whereby platforms price-discriminate by granting access only to a subset of the participating agents from the other side and discusses the related literature on matching design. Section 7 discusses identification in empirical work. Section 8 presents approaches to estimation. Section 9 discusses estimation in empirical work. Finally, Section 10 concludes.

Suggested Citation

  • Bruno Jullien & Alessandro Pavan & Marc Rysman, 2021. "Two-sided markets, pricing, and network effects," Post-Print hal-03828345, HAL.
    • Handle: RePEc:hal:journl:hal-03828345
    DOI: 10.1016/bs.hesind.2021.11.007
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    Cited by:

    1. Éric Darmon & Thomas Le Texier & Zhiwen Li & Thierry Pénard, 2025. "Multimarket contact, cross-market externalities and platform competition," Post-Print hal-05107385, HAL.
    2. Alexandre de Cornière & Andrea Mantovani & Shiva Shekhar, 2025. "Third-Degree Price Discrimination in Two-Sided Markets," Management Science, INFORMS, vol. 71(4), pages 3340-3356, April.
    3. Waterson, Michael, 2023. "Platforms as arbitrageurs and facilitators of arbitrage- a simple analysis," The Warwick Economics Research Paper Series (TWERPS) 1481, University of Warwick, Department of Economics.
    4. McCalman, Phillip, 2022. "Trade policy with FANG's (aka trade policy and multi-sided platforms)," Journal of International Economics, Elsevier, vol. 138(C).
    5. Veronika Khlyupina, 2024. "Estimation of the indirect network effect: On the example of television advertising," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 73, pages 102-118.
    6. Jo, Hanseul & Shin, Jungwoo, 2024. "Evidence-based equilibrium analysis of two-sided market in food delivery industry," Journal of Retailing and Consumer Services, Elsevier, vol. 77(C).
    7. Christian Bach & Robert Edwards & Christian Jaag, 2023. "Postal Platform Pricing with Limited Consumer Attention," Working Papers 202318, University of Liverpool, Department of Economics.
    8. Bergantiños, Gustavo & Moreno-Ternero, Juan D., 2025. "The Shapley index for music streaming platforms," Information Economics and Policy, Elsevier, vol. 71(C).
    9. Hendershott, Terrence & Rysman, Marc & Schwabe, Rainer, 2025. "Stock exchanges as platforms for data and trading," Journal of Financial Markets, Elsevier, vol. 75(C).
    10. Guillaume Monchambert, 2023. "Pricing of myopic multi-sided platforms: theory and application to carpooling," Working Papers halshs-03980205, HAL.
    11. Deutschmann, Joshua W., 2025. "Recognizing a good deal: Short-term subsidies and the dynamics of public service use," Journal of Environmental Economics and Management, Elsevier, vol. 130(C).
    12. Wang, Xinyu & Zhang, Yuxing & Zhang, Shuhua, 2024. "Dynamic order allocation in a duopoly hybrid workforce of competition: A machine learning approach," European Journal of Operational Research, Elsevier, vol. 315(2), pages 668-690.
    13. Lassmann, Andrea & Liberini, Federica & Russo, Antonio & Cuevas, Ángel & Cuevas, Rubén, 2025. "Global spillovers of taxation in the online advertising market. Theory and evidence from facebook," European Economic Review, Elsevier, vol. 172(C).
    14. Bita Shabgard & Javier Asensio, 2023. "The price effects of reducing payment card interchange fees," SERIEs: Journal of the Spanish Economic Association, Springer;Spanish Economic Association, vol. 14(2), pages 189-221, June.
    15. Jack Fisher, 2024. "Monopsony Power in the Gig Economy," CESifo Working Paper Series 11444, CESifo.
    16. Kazakova, E. & Sandomirskaia, M. & Suvorov, A. & Khazhgerieva, A. & Shavshin, R., 2023. "Platforms, online labor markets, and crowdsourcing. Part 1. Traditional online labor market," Journal of the New Economic Association, New Economic Association, vol. 60(3), pages 120-148.
    17. Giovannetti, Emanuele & Siciliani, Paolo, 2023. "Platform Competition and Incumbency Advantage under Heterogeneous Lock-in effects," Information Economics and Policy, Elsevier, vol. 63(C).
    18. Anna Kerkhof & Johannes Münster, 2025. "Strategic Complementarities in a Model of Commercial Media Bias," Games, MDPI, vol. 16(3), pages 1-46, April.
    19. Gu, Wei & Heese, H. Sebastian & Kemahlıoğlu-Ziya, Eda & Ziya, Serhan, 2024. "Pricing for services with cross-segment externalities, capacity constraints, and competition," European Journal of Operational Research, Elsevier, vol. 313(2), pages 801-813.

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