Optimal Price Allocations in Two-Sided Markets

Weisman Dennis L

Review of Network Economics, 2010, vol. 9, issue 3, 10

Abstract: This paper derives an optimal allocation rule (?*) that (i) assigns a share of the transaction price to the buyer-side of the two-sided market; (ii) is equivalent to the Rochet-Tirole price structure rule; and (iii) is a function of the own/cross-price elasticities. For linear demands, demand symmetry is sufficient for ?* = 1/2 and ?* is decreasing (increasing) in the own-price (cross-price) sensitivity parameter of buyer-side demand.

Keywords: two-sided markets; price allocations (search for similar items in EconPapers)
Date: 2010
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Citations: View citations in EconPapers (5)

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DOI: 10.2202/1446-9022.1220

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