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Second-Degree Price Discrimination on Two-Sided Markets

 |  October 22, 2012

Posted by D. Daniel Sokol

Enrico Bohme (Johann Wolfgang Goethe-University, Frankfurt) addresses Second-Degree Price Discrimination on Two-Sided Markets.

ABSTRACT: The present paper provides a descriptive analysis of the second-degree price discrimination problem on a monopolistic two-sided market. By imposing a simple two-sided framework with two distinct types of agents on one of its market sides, it will be shown that under incomplete information, the extent of platform access for high-demand agents is strictly reduced below the benchmark level (complete information). In addition, the paper’s findings imply that it is feasible in the optimum to charge higher payments from low-demand agents if the extent of interaction with agents from the opposite market side is assumed to be bundle-specific.