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A search-matching model of the buyer-seller platforms

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  • Chen, Kong-Pin
  • Yen-Chi, Huang

Abstract

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.

Suggested Citation

  • Chen, Kong-Pin & Yen-Chi, Huang, 2009. "A search-matching model of the buyer-seller platforms," MPRA Paper 38372, University Library of Munich, Germany, revised 14 Dec 2011.
    • Handle: RePEc:pra:mprapa:38372
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    References listed on IDEAS

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    More about this item

    Keywords

    two-sided platform; fees; network externalities; subsudy;
    All these keywords.

    JEL classification:

    • L81 - Industrial Organization - - Industry Studies: Services - - - Retail and Wholesale Trade; e-Commerce
    • D02 - Microeconomics - - General - - - Institutions: Design, Formation, Operations, and Impact

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