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Abstract
Introduction
Terminology and Background
Conclusion
References
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Economics
Industrial Organization

Two-sided markets, pricing, and network effects

Profile image of Alessandro PavanAlessandro Pavan

Handbook of Industrial Organization

https://doi.org/10.1016/BS.HESIND.2021.11.007
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102 pages

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Abstract

The chapter has 9 sections, covering the theory of two-sided markets and related empirical work. Section 1 introduces the reader to the literature. Section 2 covers the case of markets dominated by a single monopolistic firm. Section 3 discusses the theoretical literature on competition for the market, focusing on pricing strategies that firms may follow to prevent entry. Section 4 discusses pricing in markets in which multiple platforms are active and serve both sides. Section 5 presents alternative models of platform competition. Section 6 discusses richer matching protocols whereby platforms pricediscriminate by granting access only to a subset of the participating agents from the other side and discusses the related literature on matching design. Section 7 discusses identification in empirical work. Section 8 discusses estimation in empirical work. Finally, Section 9 concludes.

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