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Price Disclosure by Two-Sided Platforms

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  • Paul Belleflamme
  • Martin Peitz

Abstract

We consider two-sided platforms with the feature that some users on one or both sides of the market lack information about the price charged to participants on the other side of the market. With positive cross-group external effects, such lack of price information makes demand less elastic. A monopoly platform does not benefit from opaqueness and optimally reveals price information. By contrast, in a two-sided singlehoming duopoly, platforms benefit from opaqueness and, thus, do not have an incentive to disclose price information. In competitive bottleneck markets, results are more nuanced: if one side is fully informed (for exogenous reasons), platforms may decide to inform users on the other side either fully, partially or not at all, depending on the strength of cross-group external effects and the degree of horizontal differentiation.

Suggested Citation

  • Paul Belleflamme & Martin Peitz, 2019. "Price Disclosure by Two-Sided Platforms," CRC TR 224 Discussion Paper Series crctr224_2019_099, University of Bonn and University of Mannheim, Germany.
    • Handle: RePEc:bon:boncrc:crctr224_2019_099
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    References listed on IDEAS

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    Cited by:

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    2. Martin Peitz, 2024. "The Economic Theory of Two-Sided Platforms," CRC TR 224 Discussion Paper Series crctr224_2024_584, University of Bonn and University of Mannheim, Germany.
    3. Qiuyu Lu & Noriaki Matsushima & Shiva Shekhar, 2024. "Welfare Implications of Personalized Pricing in Competitive Platform Markets: The Role of Network Effects," CESifo Working Paper Series 10994, CESifo.
    4. Guillaume Monchambert, 2023. "Pricing of myopic multi-sided platforms: theory and application to carpooling," Working Papers halshs-03980205, HAL.
    5. Geng, Yang & Zhang, Yulin, 2020. "Platform launch in two-sided markets and users’ expectations," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 558(C).
    6. Yan, Xiaoyu & Liu, Weihua & Tang, Ou & Hou, Jiahe, 2024. "When will an overconfident entrant in the two-sided market do more good than harm?," International Journal of Production Economics, Elsevier, vol. 267(C).
    7. Juan Manuel Sánchez-Cartas, 2021. "Intellectual property and taxation of digital platforms," Journal of Economics, Springer, vol. 132(3), pages 197-221, April.
    8. Martin Peitz, 2023. "Governance and Regulation of Platforms," CRC TR 224 Discussion Paper Series crctr224_2023_480, University of Bonn and University of Mannheim, Germany.
    9. Luca Sandrini & Robert Somogyi, 2022. "News Media Bargaining Codes," Working Papers 22-06, NET Institute.

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    More about this item

    Keywords

    price transparency; two-sided markets; competitive bottleneck; platform competition; price information; strategic disclosure;
    All these keywords.

    JEL classification:

    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • L12 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Monopoly; Monopolization Strategies
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets

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