Series: IMF Working Papers
Author(s): Wilko Bolt , and Alexander Tieman
Publisher: INTERNATIONAL MONETARY FUND
Publication Date: 01 October 2005
Keywords: Two-sided markets, social optimum, cost recovery, operational losses, pricing, social welfare, prices, payment systems, demand functions, Market Structure
Using a simple model of two-sided markets, we show that, in the social optimum, platform pricing leads to an inherent cost recovery problem. This result is driven by the positive externality of participation that u...