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.;
JEL codes
- D4: Market Structure and Pricing
- D82: Asymmetric and Private Information • Mechanism Design
- L5: Regulation and Industrial Policy
- M3: Marketing and Advertising
Replaced by
Doh-Shin Jeon, Byung-Cheol Kim, and Domenico Menicucci, “Second-Degree Price Discrimination by a Two-sided Monopoly Platform”, American Economic Journal: Microeconomics, vol. 14, n. 2, May 2022, pp. 322–369.
Reference
Doh-Shin Jeon, Byung-Cheol Kim, and Domenico Menicucci, “Second-degree Price Discrimination by a Two-sided Monopoly Platform”, TSE Working Paper, n. 16-690, September 2016, revised June 2020.
See also
Published in
TSE Working Paper, n. 16-690, September 2016, revised June 2020