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Optimal Price Allocations in Two-Sided Markets

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  • Weisman Dennis L

    (Kansas State University)

Abstract

This paper derives an optimal allocation rule (?*) that (i) assigns a share of the transaction price to the buyer-side of the two-sided market; (ii) is equivalent to the Rochet-Tirole price structure rule; and (iii) is a function of the own/cross-price elasticities. For linear demands, demand symmetry is sufficient for ?* = ½ and ?* is decreasing (increasing) in the own-price (cross-price) sensitivity parameter of buyer-side demand.

Suggested Citation

  • Weisman Dennis L, 2010. "Optimal Price Allocations in Two-Sided Markets," Review of Network Economics, De Gruyter, vol. 9(3), pages 1-10, August.
    • Handle: RePEc:bpj:rneart:v:9:y:2010:i:3:n:5
    DOI: 10.2202/1446-9022.1220
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    Cited by:

    1. Carbó-Valverde Santiago & Liñares-Zegarra José Manuel & Rodríguez-Fernández Francisco, 2012. "Feedback Loop Effects in Payment Card Markets: Empirical Evidence," Review of Network Economics, De Gruyter, vol. 11(2), pages 1-24, June.
    2. Jabbour, Chady & Rey-Valette, Hélène & Maurel, Pierre & Salles, Jean-Michel, 2019. "Spatial data infrastructure management: A two-sided market approach for strategic reflections," International Journal of Information Management, Elsevier, vol. 45(C), pages 69-82.
    3. Dennis Weisman & Soheil Nadimi, 2019. "A note on price regulation in two-sided markets," Economics Bulletin, AccessEcon, vol. 39(4), pages 2766-2777.
    4. Wenqing Wu & Xuan Huang & Yue Li & Chien-Chi Chu, 2018. "Optimal Quality Strategy and Matching Service on Crowdfunding Platforms," Sustainability, MDPI, vol. 10(4), pages 1-17, April.
    5. Weisman Dennis L., 2015. "The Political Economy of Net Neutrality Regulation," The Economists' Voice, De Gruyter, vol. 12(1), pages 13-18, August.

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