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Journal of Research in Industrial
Organization
Volume 2010
(2010),
Article ID 290274,
Journal of Research in Industrial Organization, 10 pages.
DOI: 10.5171/2010.290274
Optimal Pricing of a Duopoly Platform with Two-Sided Congestion Effect
Chokri
Aloui1 and
Khaïreddine Jebsi2
1 Faculté
de Droit et des Sciences Economiques et Politiques, Sousse,
Tunisia,
2
Institut
supérieur de Gestion, Sousse, Tunisia
Copyright
© 2010 Chokri
Aloui, Khaïreddine Jebsi. This is
an open access
article distributed under the Creative Commons Attribution License
unported
3.0, which permits unrestricted use, distribution, and reproduction in
any
medium, provided that original work is properly cited.
Abstract
We
study, in this paper, the impact of two-sided congestion effect on the
pricing policy of a two-sided duopoly platform. Relative to Armstrong
(2006), we show that, with congestion effect, (i) competition for
submarket share is softened, (ii) the divide-and-conquer pricing
strategy is modified insofar as it depends upon the differential of the
marginal congestion costs and (iii) each platform charges any agent of
one side a price that covers not only the marginal congestion cost that
he imposes on agents of his own side having joined its platform, as the
traditional principle of the textbook congestion pricing, but also it
covers the marginal congestion cost that he indirectly imposes on the
of-his-type agents having chosen to join the rival platform. This issue
matters despite there is no technical link between the two platforms.
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