A Price Theory of Multi-Sided Platforms

@article{Weyl2009APT,
  title={A Price Theory of Multi-Sided Platforms},
  author={E. Glen Weyl},
  journal={IO: Regulation},
  year={2009}
}
  • E. Weyl
  • Published 2009
  • Economics
  • IO: Regulation
I develop a general theory of monopoly pricing of networks. Platforms use insulating tariffs to avoid coordination failure, implementing any desired allocation. Profit-maximization distorts in the spirit of Spence (1975) by internalizing only network externalities to marginal users. Thus the empirical and prescriptive content of the popular Rochet and Tirole (2006) model of two-sided markets turns on the nature of user heterogeneity. I propose a more plausible, yet equally tractable, model of… Expand
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