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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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File URL: http://mpra.ub.uni-muenchen.de/38372/1/MPRA_paper_38372.pdf
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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. E. Glen Weyl, 2010. "A Price Theory of Multi-sided Platforms," American Economic Review, American Economic Association, vol. 100(4), pages 1642-72, September.
  2. Glenn Ellison & Drew Fudenberg & Markus Möbius, 2004. "Competing Auctions," Journal of the European Economic Association, MIT Press, vol. 2(1), pages 30-66, 03.
  3. Glenn Ellison & Drew Fudenberg, 2003. "Knife Edge of Plateau: When Do Market Models Tip?," NBER Working Papers 9528, National Bureau of Economic Research, Inc.
  4. Jullien, Bruno, 2008. "Price Skewness and Competition in Multi-Sided Markets," IDEI Working Papers 504, Institut d'Économie Industrielle (IDEI), Toulouse.
  5. Marc Rysman, 2009. "The Economics of Two-Sided Markets," Journal of Economic Perspectives, American Economic Association, vol. 23(3), pages 125-43, Summer.
  6. 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.
  7. 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.
  8. Graeme Guthrie & Julian Wright, 2003. "Competing Payment Schemes," Departmental Working Papers wp0311, National University of Singapore, Department of Economics.
  9. 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.
  10. repec:rje:randje:v:37:y:2006:3:p:645-667 is not listed on IDEAS
  11. repec:rje:randje:v:37:y:2006:3:p:668-691 is not listed on IDEAS
  12. Marc Rysman, 2004. "Competition Between Networks: A�Study of the Market for Yellow�Pages," Review of Economic Studies, Wiley Blackwell, vol. 71(2), pages 483-512, 04.
  13. Ambrus, Attila & Argenziano, Rossella, 2009. "Asymmetric Networks in Two-Sided Markets," Scholarly Articles 3204916, Harvard University Department of Economics.
  14. repec:hal:journl:hal-00173715 is not listed on IDEAS
  15. 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.
  16. repec:hrv:faseco:4589709 is not listed on IDEAS
  17. 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.
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