Two-Sided Pricing and Endogenous Network Effects

This paper examines a monopoly platform's two-sided pricing strategies in a setting with seller competition, which gives rise to not only positive cross-side network effects between buyers and sellers, but also a negative same-side network effect among sellers. We show that platform pricing depends crucially on the characteristics associated with the market as a whole (i.e., the two sides combined) rather than a comparison between the two …