NEGATIVE INTRA-GROUP EXTERNALITIES IN TWO-SIDED MARKETS

Paul Belleflamme () and Eric Toulemonde

International Economic Review, 2009, vol. 50, issue 1, pages 245-272

Abstract: Two types of agents interact on a pre-existing free platform. Agents value positively the presence of agents of the other type but may value negatively the presence of agents of their own type. We ask whether a new platform can find fees and subsidies so as to divert agents from the existing platform and make a profit. We show that this might be impossible if intra-group negative externalities are sufficiently (but not too) strong with respect to positive inter-group externalities. Copyright © (2009) by the Economics Department of the University of Pennsylvania and the Osaka University Institute of Social and Economic Research Association.

Date: 2009
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Related works:
Working Paper: Negative Intra-Group Externalities in Two-Sided Markets (2007)
Working Paper: Negative intra-group externalities in two-sided markets (2007)
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