A Price Theory of Multi-sided Platforms: Comment

Hongru Tan and Julian Wright

American Economic Review, 2018, vol. 108, issue 9, 2758-60

Abstract: Weyl (2010) shows that in multi-sided platform settings, profit maximization leads to classical and Spence distortions, with the Spence distortion providing a new explanation for why prices may sometimes be too high (or too low) on platforms. However, the key formulas Weyl gives comparing privately and socially optimal prices are misstated. Properly interpreted, his results only explain marginal incentives with respect to setting prices and not the total distortion in prices, which can be very different.

JEL-codes: D42 D85 L12 L14 (search for similar items in EconPapers)
Date: 2018
Note: DOI: 10.1257/aer.20172018
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Citations: View citations in EconPapers (5)

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