Two-sided Markets and Electronic Intermediaries

Abstract

The object of this paper is to discuss intermediation on-line from the perspective of two-sided markets. It builds a simple model of the intermediation activity when trading partners are involved into a commercial relationship and uses it to illustrate some of the results that emerge in the two-sided market literature, as well as to discuss some new aspects. The first part concentrates on a monopoly intermediation service and discusses both efficient pricing and monopoly pricing. The second part discusses the nature of competition between intermediaries, addressing issues such as competitive cross-subsidies, multi-homing or tying. (JEL D4, D85, L40, L12, L13, L14)