Welfare implications of personalized pricing in competitive platform markets: The role of network effects
Year: 2025
Type: article
Abstract: This study explores the welfare impact of personalized pricing for consumers in a duopolistic two-sided market, with consumers single-homing and developers affiliating with a platform according to their outside option. Personalized pricing, which is private in nature, cannot influence expectations regarding the network sizes, inducing the platforms to offer lower participation fees for developers. Those lower fees increase network benefits for consumers, allowing the platforms to exploit these benefits through personalized pricing. Personalized prices are higher when the network value for developers is high, benefiting competing platforms at the expense of consumers. These findings offer policy insights on personalized pricing.
Authors: Qiuyu Lu, Noriaki Matsushima, Shiva Shekhar
Institutions: The University of Osaka, Tilburg University
Language: English
Subfield: Strategy and Management
Domain: Social Sciences
Open Access status: hybrid
Estimated APC paid: $3,290
Awards: Economic Analysis on Utilization of Personal Data and Consumers' Identity Management in Oligopoly Markets, G3274828825, Economic stagnation and widening wealth inequality: Crises of the world economy and a construction of a unified macroeconomic theory, Theoretical and Experimental Analysis of Market Foreclosure via Exclusive Contracts, G4550967234, G4713469407, Platform competition for the market, Oligopolists' market power in labor and product markets and the interactions among the markets, G7824249963, Competition Policy Regarding Platform-Based and Technology/Data-Intensive Supply Chains
OpenAlex ID: W4414399454