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A search-matching model of the buyer-seller platforms

  • Chen, Kong-Pin
  • Yen-Chi, Huang

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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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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  1. Rochet, Jean-Charles & Tirole, Jean, 2006. "Tying in Two-Sided Markets and the Honor All Cards Rule," IDEI Working Papers 440, Institut d'Économie Industrielle (IDEI), Toulouse, revised 2007.
  2. Jean Tirole & Jean-Charles Rochet, 2006. "Two-Sided Markets : A Progress Report," Post-Print hal-00173715, HAL.
  3. Jean-Charles Rochet & Jean Triole, 2002. "Platform competition in two sided markets," LSE Research Online Documents on Economics 24929, London School of Economics and Political Science, LSE Library.
  4. repec:rje:randje:v:37:y:2006:3:p:668-691 is not listed on IDEAS
  5. Kenneth Burdett & Shouyong Shi & Randall Wright, 2001. "Pricing and Matching with Frictions," Journal of Political Economy, University of Chicago Press, vol. 109(5), pages 1060-1085, October.
  6. E. Glen Weyl, 2010. "A Price Theory of Multi-sided Platforms," American Economic Review, American Economic Association, vol. 100(4), pages 1642-72, September.
  7. Marc Rysman, 2009. "The Economics of Two-Sided Markets," Journal of Economic Perspectives, American Economic Association, vol. 23(3), pages 125-43, Summer.
  8. Glenn Ellison & Drew Fudenberg, 2003. "Knife-Edge or Plateau: When do Market Models Tip?," Levine's Working Paper Archive 506439000000000098, David K. Levine.
  9. Ambrus, Attila & Argenziano, Rossella, 2009. "Asymmetric Networks in Two-Sided Markets," Scholarly Articles 3204916, Harvard University Department of Economics.
  10. Graeme Guthrie & Julian Wright, 2003. "Competing Payment Schemes," Departmental Working Papers wp0311, National University of Singapore, Department of Economics.
  11. Glenn Ellison & Drew Fudenberg & Markus Mobius, 2010. "Competing Auctions," Levine's Working Paper Archive 506439000000000092, David K. Levine.
  12. Andrei Hagiu, 2009. "Two-Sided Platforms: Product Variety and Pricing Structures," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 18(4), pages 1011-1043, December.
  13. repec:hrv:faseco:4589709 is not listed on IDEAS
  14. Jullien, Bruno, 2008. "Price Skewness and Competition in Multi-Sided Markets," IDEI Working Papers 504, Institut d'Économie Industrielle (IDEI), Toulouse.
  15. repec:rje:randje:v:37:y:2006:3:p:645-667 is not listed on IDEAS
  16. 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.
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