Platforms Exclude But Do Not Segregate

14 Pages Posted: 8 Oct 2013

Date Written: July 1, 2013

Abstract

Platforms like telecommunication networks sell participation into groups, with group quality being determined by group composition. A monopolist may price-discriminate by offering several mutually exclusive groups of different qualities and prices, but such behavior seems absent from platform industries. The reason is that, under positive network externalities, both the welfare and profit maximizing group structures involve a single group, the latter having a higher price.

Keywords: Asymmetric and Private Information, Network Formation and Analysis, Economics of Contracts

JEL Classification: D82, D85, D86

Suggested Citation

Veiga, Andre, Platforms Exclude But Do Not Segregate (July 1, 2013). Available at SSRN: https://ssrn.com/abstract=2337052 or http://dx.doi.org/10.2139/ssrn.2337052

Andre Veiga (Contact Author)

Imperial College London ( email )

South Kensington Campus
Exhibition Road
London, Greater London SW7 2AZ
United Kingdom

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