Endogenous Network Effects, Platform Pricing and Market Liquidity

• Main Authors: Lin, Mei, Wu, Ruhai, Zhou, Wen
• Format: text
• Language: English
• Published: Institutional Knowledge at Singapore Management University 2015
• Subjects: Two-sided platforms; network effects; market liquidity; subsidy; product differentiation; Computer Sciences; Management Information Systems; OS and Networks
• Online Access: https://ink.library.smu.edu.sg/sis_research/2219; https://ink.library.smu.edu.sg/context/sis_research/article/3219/viewcontent/SSRN_id2426033.pdf
• Institution: Singapore Management University

This paper examines a monopoly platform's two-sided pricing strategies in a setting with seller competition, which gives rise to not only positive cross-side network effects between buyers and sellers, but also a negative same-side network effect among sellers. We show that platform pricing dep...