Two-Sided Market with Spillover: Modeling a City

31 Pages Posted: 20 May 2009 Last revised: 29 May 2009

Date Written: May 1, 2009


The paper explores the analogy between city and two-sided market. It generalizes the results on the pricing strategies of the platform in the two-sided markets for the case when concentration spillover plays an important role. The two-sided market framework is applied to model a city. The paper highlights the importance of the network effect and labor market structure for city size, governance and agglomeration formation. The cases of an isolated city and competing cities are considered.

Keywords: Two-sided markets, Industrial organization, Urban economics, Concentration spillover, City, Matching

JEL Classification: D42, D43, H71, L12, L13, R12, R30

Suggested Citation

Shchetinin, Oleg, Two-Sided Market with Spillover: Modeling a City (May 1, 2009). Available at SSRN: or

Oleg Shchetinin (Contact Author)

University of Gothenburg ( email )

Box 640
Vasagatan 1, E-building, floor 5 & 6
Göteborg, 40530

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