Asymmetric Networks in Two-Sided Markets
American Economic Journal: Microeconomics
vol. 1,
no. 1, February 2009
(pp. 17-52)
Abstract
This paper investigates pricing decisions and network choices in two-sided markets with network externalities. Consumers are heterogeneous in how much they value the externality. Imposing restrictions on the extent of coordination failure among consumers generates clear qualitative conclusions about equilibrium market configurations. Multiple asymmetric networks can coexist in equilibrium, both in the case of a monopolist network provider and in the case of competing providers. These equilibria have the property that one network is cheaper and larger on one side, while the other network is cheaper and larger on the other side. Product differentiation is endogenized by consumers' network choices. (JEL D85, L12, L13, L14, D42, D43)Citation
Ambrus, Attila, and Rossella Argenziano. 2009. "Asymmetric Networks in Two-Sided Markets." American Economic Journal: Microeconomics, 1 (1): 17-52. DOI: 10.1257/mic.1.1.17JEL Classification
- D42 Market Structure and Pricing: Monopoly
- D43 Market Structure and Pricing: Oligopoly and Other Forms of Market Imperfection
- D85 Network Formation and Analysis: Theory
- L12 Monopoly; Monopolization Strategies
- L13 Oligopoly and Other Imperfect Markets
- L14 Transactional Relationships; Contracts and Reputation; Networks
There are no comments for this article.
Login to Comment