Network goods, price discrimination, and two-sided platforms

Paul Belleflamme and Martin Peitz
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Paul Belleflamme: Université catholique de Louvain, LIDAM/CORE, Belgium
Martin Peitz: University of Mannheim

No 3317, LIDAM Reprints CORE from Université catholique de Louvain, Center for Operations Research and Econometrics (CORE)

Abstract: A monopolist selling a network good to heterogeneous users is shown to become a two-sided platform if it can condition prices on some user characteristics or if it cannot but induces user self-selection by offering screening contracts. This shows that the availability of sophisticated pricing instruments is essential to make a platform two-sided, not the ability to distinguish separate user groups. The use of freemium strategies (which consists of offering a base version at zero price and a premium version at a positive price) emerges as a special case of versioning.

Keywords: Network goods; two-sided platforms; group pricing; versioning; freemium (search for similar items in EconPapers)
JEL-codes: D21 D42 L12 L14 (search for similar items in EconPapers)
Pages: 29
Date: 2024-07-31
Note: In: Journal of Institutional and Theoretical Economics, 2024
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Persistent link: https://EconPapers.repec.org/RePEc:cor:louvrp:3317

DOI: 10.1628/jite-2024-0024

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