Critical Factors for Platforms' Profit in Access Fee Charging Two-Sided Market

Abstract

In many of two-sided market studies, network externality has been the most attention receiving variable. Li et al. suggested in their work that if platform does not differentiate itself enough, attempt to increase network externality could actually harm platforms profit. In this work, a model was designed to accommodate buyer side access fee, which was not considered in Li et al.s model. Examining newly constructed model, several implications are derived. There are difference makers in each of optimization cases

also no-difference makers. Moreover access fee differences cause uncertainties that are possible to control with platforms access fees for either seller or buyer. Furthermore the finding of common no-difference maker could free platforms from what these no-difference makers represent. Also application of the results to case of professional SNS shows access fee discount of certain platform could be an unnecessary discount. This paper contribute to two-sided market study by providing hints of where to allocate its resource and where not to

also gives shows how each of variables are related and even interacts (particularly seller side access fee and buyer side access fee). Furthermore, the study verifies result of Li et al.s study and shows their result might be lack of generality.