Pricing of myopic multi-sided platforms: theory and application to carpooling

Guillaume Monchambert

Working Papers from HAL

Abstract: This paper investigates pricing decisions when a monopolistic multi-sided platform is myopic, that is unable to distinguish between two agents who participate on the same side of the platform but produce different externalities. We find that the structure of prices is the same for profit- and welfare-maximizing platforms. The unique price supplied to the two undistinguishable agents is a weighted average of the perfect information prices, where the weights depend on demand elasticities and externalities produced by the other undistinguishable agent. The prices supplied to the distinguishable agents are also affected by information asymmetry through an extra term than can be positive or negative. Introducing Hotelling competition does not affect results. We apply the model to a monopolistic short-distance carpooling platform with and without HOV lane, and show that the profit-maximizing platform does not subsidize efficiently the "good" side of the market, leading to very little traffic reduction. These results call for a discussion of the regulation of myopic platforms in general, and those of carpooling in particular.

Keywords: Network effect; Information asymmetry; Externality; Working Papers du LAET (search for similar items in EconPapers)
Date: 2023-02-14
New Economics Papers: this item is included in nep-com, nep-des, nep-gth, nep-ind, nep-pay, nep-reg, nep-tre and nep-ure
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