Social Welfare and Cost Recovery in Two-Sided Markets

Social Welfare and Cost Recovery in Two-Sided Markets
Using a simple model of two-sided markets, we show that, in the social optimum, platform pricing leads to an inherent cost recovery problem. This result is driven by the positive externality of participation that users on either side of the market exert on the opposite side. The contribution of this positive externality to social welfare leads... READ MORE...

Publication date: October 2005
ISBN 9781451862133
$15.00

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