A growing number of industries are organized as so-called two-sided markets in which platforms enable interactions between two groups of users, each of which cares about the size and attributes of the other group on the same platform. The literature to date examines how platforms set prices to the two sides and whether the resulting price structure results in market failure. The answers to these questions depend on the nature of cross-group and own-group externalities, the types of fees possible (membership or per-transaction), and whether one or both sides multihome.
KeywordsAccess pricing Advertising Competitive bottlenecks Complementary goods Cross-group externalities Matching Multihoming Network effects Platforms Price discrimination Shopping malls Singlehoming Two-sided markets User fees
JEL ClassificationL10 D40 L11 L13 L15
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