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)
Ambrus, Attila, and Rossella Argenziano.
"Asymmetric Networks in Two-Sided Markets."
American Economic Journal: Microeconomics,
Market Structure and Pricing: Monopoly
Market Structure and Pricing: Oligopoly and Other Forms of Market Imperfection
Network Formation and Analysis: Theory
Monopoly; Monopolization Strategies
Oligopoly and Other Imperfect Markets
Transactional Relationships; Contracts and Reputation; Networks