Welfare implications of personalized pricing in competitive platform markets: The role of network effects

Qiuyu Lu, Noriaki Matsushima and Shiva Shekhar
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Qiuyu Lu: Ph.D. in Economics, Graduate School of Economics, the University of Osaka
Shiva Shekhar: Tilburg School of Economics and Management, Tilburg University

No 25E003, OSIPP Discussion Paper from Osaka School of International Public Policy, Osaka University

Abstract: This study explores the welfare impact of personalized pricing for consumers in a duopolistic two-sided market, with consumers single-homing and developers affiliating with a platform according to their outside option. Personalized pricing, which is private in nature, cannot influence expectations regarding the network sizes, inducing the platforms to offer lower participation fees for developers. Those lower fees increase network benefits for consumers, allowing the platforms to exploit these benefits through personalized pricing. Personalized prices are higher when the network value for developers is high, benefiting competing platforms at the expense of consumers. These findings offer policy insights on personalized pricing.

Keywords: Personalized pricing; Uniform prices; Two-sided market; Content developers (search for similar items in EconPapers)
JEL-codes: D43 L13 M21 (search for similar items in EconPapers)
Pages: 44,19, 5, 5, 7pages
Date: 2025-07
New Economics Papers: this item is included in nep-com, nep-mic and nep-pay
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https://www.osipp.osaka-u.ac.jp/archives/DP/2025/DP2025E003.pdf (application/pdf)

Related works:
Working Paper: Welfare Implications of Personalized Pricing in Competitive Platform Markets: The Role of Network Effects (2024)
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Persistent link: https://EconPapers.repec.org/RePEc:osp:wpaper:25e003

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