A search-matching model for the buyer-seller platform

Based on the frictional matching framework, the article provides a theoretical model for a specific type of two-sided platform: the buyerseller transaction platform. In the model, the number of participants and the source of network externalities are endogeneously determined. The platform is shown t...

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Veröffentlicht in:CESifo GmbH CESifo economic studies
1. Verfasser: Chen, Kong-pin (VerfasserIn)
Weitere Verfasser: Huang, Yen-Chi (VerfasserIn)
Format: UnknownFormat
Sprache:eng
Veröffentlicht: 2012
Schlagworte:
two-sided markets > directed search > network externality > platform pricing > Aufsatz in Zeitschrift
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Zusammenfassung:Based on the frictional matching framework, the article provides a theoretical model for a specific type of two-sided platform: the buyerseller transaction platform. In the model, the number of participants and the source of network externalities are endogeneously determined. The platform is shown to exhibit both positive cross-group and negative within-group network externalities. The optimal pricing of the platform depends not only on the cost of providing service and the benefits of the participants, but also on how the marginal entrant (either a buyer or a seller) affects the matching probability. Since the sellers can shift the burden of entry fee to the buyers, the platform never subsidizes the sellers.
ISSN:1610-241X