A Price Theory of Multi-Sided Platforms | Zendy

E. Glen Weyl | Zendy

AI Assistant Blog Pricing

Home ZAIA Blog

Open Access

A Price Theory of Multi-Sided Platforms

Author(s) -

E. Glen Weyl

Publication year - 2010

Publication title -

american economic review

Language(s) - English

Resource type - Journals

SCImago Journal Rank - 16.936

H-Index - 297

eISSN - 1944-7981

pISSN - 0002-8282

DOI - 10.1257/aer.100.4.1642

Subject(s) - economics , monopoly , profit maximization , market power , microeconomics , externality , maximization , network effect , utility maximization , price discrimination , profit (economics) , mathematical economics

I develop a general theory of monopoly pricing of networks. Platforms use insulating tariffs to avoid coordination failure, implementing any desired allocation. Profit maximization distorts in the spirit of A. Michael Spence (1975) by internalizing only network externalities to marginal users. Thus the empirical and prescriptive content of the popular Jean-Charles Rochet and Jean Tirole (2006) model of two-sided markets turns on the nature of user heterogeneity. I propose a more plausible, yet equally tractable, model of heterogeneity in which users differ in their income or scale. My approach provides a general measure of market power and helps predict the effect of price regulation and mergers. (JEL D42, D85, L14)

The content you want is available to Zendy users.

Already have an account? Click here to sign in.

Having issues? You can contact us here

Accelerating Research