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Social Welfare and Cost Recovery in Two-Sided Markets

Social Welfare and Cost Recovery in Two-Sided Markets »

Source: Social Welfare and Cost Recovery in Two-Sided Markets

Volume/Issue: 2005/194

Series: IMF Working Papers

Author(s): Wilko Bolt , and Alexander Tieman

Publisher: INTERNATIONAL MONETARY FUND

Publication Date: 01 October 2005

ISBN: 9781451862133

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...

Social Welfare and Cost Recovery in Two-Sided Markets

Social Welfare and Cost Recovery in Two-Sided Markets »

Volume/Issue: 2005/194

Series: IMF Working Papers

Author(s): Wilko Bolt , and Alexander Tieman

Publisher: INTERNATIONAL MONETARY FUND

Publication Date: 01 October 2005

DOI: http://dx.doi.org/10.5089/9781451862133.001

ISBN: 9781451862133

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...