Common Network Externalities Reshape Pricing in Two-Sided Markets
Competition in two-sided markets with common network externalities can benefit both groups involved. The study focuses on how platforms' profits and pricing are influenced by these externalities. When the externality is homogeneous, platforms can shift rents between consumers and providers. In cases where the externality is of degree zero, platforms' profits are not affected by its intensity. This differs from models with standard positive inter-group network effects.