A Two-Sided Market Model of Optimal Price Structure for Instant Messenger | Zendy

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A Two-Sided Market Model of Optimal Price Structure for Instant Messenger

Author(s) -

Jun Xu

Publication year - 2013

Publication title -

journal of applied mathematics

Language(s) - English

Resource type - Journals

SCImago Journal Rank - 0.307

H-Index - 43

eISSN - 1687-0042

pISSN - 1110-757X

DOI - 10.1155/2013/768168

Subject(s) - monopolistic competition , instant , marginal cost , cartel , operator (biology) , revenue , the internet , microeconomics , service (business) , computer science , bertrand competition , advertising , business , industrial organization , oligopoly , economics , collusion , marketing , biochemistry , chemistry , physics , accounting , repressor , quantum mechanics , cournot competition , world wide web , transcription factor , gene , monopoly

Instant messenger (IM) is one of the most popular Internet applications all over the world. This paper examines the pricing problem of IM based on two-sided market model. IM serves as a two-sided platform, which gets both Internet users and advertisers on board. This paper concludes that IM operator adopts a heavily skewed price structure that favors IM users both under monopolistic case and under horizontal differentiated duopolistic case. When advertising revenue is large enough relatively to marginal cost for serving IM users, IM users can enjoy free service provided by IM operators. The competitive equilibrium of duopolistic case is not necessarily symmetric when advertisers choose singlehoming. Even in the symmetric equilibrium platform would rather deter all advertisers

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