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Second-degree Price Discrimination by a Two-sided Monopoly Platform

Doh-Shin Jeon (), Byung-Cheol Kim () and Domenico Menicucci

No 16-690, TSE Working Papers from Toulouse School of Economics (TSE)

Abstract: We study second-degree price discrimination by a two-sided monopoly platform. The incentive constraints of the agents on the value creation side may be in conflict with internalizing externalities on the value capture side, which may render pooling optimal. Even without such conflict between the two sides, pooling may be optimal due to type-dependent Spence effects when the preferences of the marginal agents diverge from those of the average agents on the value capture side. We perform a welfare analysis of price discrimination and show that prohibiting price discrimination improves welfare when there is a strong conflict between the two sides.

Keywords: platform; price discrimination; two-sided markets; non-responsiveness; Spence effect. (search for similar items in EconPapers)
JEL-codes: D4 D82 L5 M3 (search for similar items in EconPapers)
Date: 2016-09, Revised 2020-06
New Economics Papers: this item is included in nep-mic, nep-mkt and nep-net
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Working Paper: Second-degree price discrimination by a two-sided monopoly platform (2016) Downloads
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