Second-Degree Price Discrimination on Two-Sided Markets

Abstract

AbstractThe paper provides an analysis of the second-degree price discrimination problem on a monopolistic two-sided market. In a framework with two distinct types of agents on either side of the market, we show that under incomplete information the extent of platform access for high-demand agents is strictly lower than the benchmark level with complete information. In addition, we find that it is possible in the monopoly optimum that the contract for low-demand agents is more expensive than the one for high-demand agents if the extent of interaction with agents from the opposite market side is contract-specific.