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A search-matching model of the buyer-seller platforms

Kong-Pin Chen and Huang Yen-Chi

MPRA Paper from University Library of Munich, Germany

Abstract: Based on the frictional matching framework, the paper provides a theoretical model for a specic type of two-sided platform: The buyer- seller transaction platform. In the model, the number of participants and the source of network externalities are endogenously determined. The platform is shown to exhibit both positive cross-group and neg- ative within-group network externalities. The optimal pricing of the platform depends not only on the cost of providing service and the benets of the participants, but also on how the marginal entrant (ei- ther a buyer or a seller) aects the matching probability. Since the sellers can shift the burden of entry fee to the buyers, the platform never subsidizes the sellers.

Keywords: two-sided platform; fees; network externalities; subsudy (search for similar items in EconPapers)
JEL-codes: D02 L81 (search for similar items in EconPapers)
Date: 2009-02-12, Revised 2011-12-14
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Journal Article: A Search-Matching Model of the Buyer--Seller Platforms (2012) Downloads
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