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Title:Taxation in two-sided markets PDF Logo
Authors:Kind, Hans Jarle
Koethenbuerger, Marko
Schjelderup, Guttorm
Issue Date:2006
Series/Report no.:CESifo working paper 1871
Abstract:Two-sided platform firms serve distinct customer groups that are connected through interdependent demand, and include major businesses such as the media industry, banking, and the software industry. A well known textbook result in one-sided markets is that a government may increase a monopolist's output and reduce the deadweight loss by subsidizing output. The present paper shows that this result need not hold in a two-sided market. On the contrary, a higher ad-valorem tax rate - rather than a subsidy - could increase output and enhance welfare.
JEL:D4
D43
H21
H22
L13
Document Type:Working Paper
Appears in Collections:CESifo Working Papers, CESifo Group Munich

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