Network goods, price discrimination, and two-sided platforms

Paul Belleflamme and Martin Peitz

No 2020024, LIDAM Discussion Papers CORE from Université catholique de Louvain, Center for Operations Research and Econometrics (CORE)

Abstract: A monopolist sells a network good to a set of heterogeneous users who all care about total participation. We show that the provider of the network good effectively becomes a two-sided platform if it can condition prices on some user characteristics. This still holds true if the network operator cannot obsoerve consumer characteristics but induces user self-selection when it offers screening contracts. In our setting, all incentive constraints are slack The use of freemium strategies emerges as a special case of versioning. Here, a base version is offered at zero price and a premium version at a positive price. Overall, the paper illustrates the close link between price discrimination in the presence of a network good and pricing by a two-sided platform.

Keywords: network goods; two-sided markets; platform pricing; group pricing; menu pricing (search for similar items in EconPapers)
JEL-codes: D62 L12 L82 L86 (search for similar items in EconPapers)
Date: 2020-07-01
New Economics Papers: this item is included in nep-com, nep-cta, nep-gth, nep-ict, nep-ind, nep-mic, nep-mkt, nep-net and nep-reg
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Citations: View citations in EconPapers (7)

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Related works:
Working Paper: Network Goods, Price Discrimination, and Two-sided Platforms (2023)
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Persistent link: https://EconPapers.repec.org/RePEc:cor:louvco:2020024

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