Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/267314 
Year of Publication: 
2022
Series/Report no.: 
CESifo Working Paper No. 10082
Publisher: 
Center for Economic Studies and ifo Institute (CESifo), Munich
Abstract: 
We challenge the dichotomy of network effects and highlight that they are not an exogenous characteristic of networks, but endogenous to the decisions of network users. When users choose which activities to perform in a network, multi-activity users transform indirect into direct network effects and a network effectively becomes one-sided if merely multi-activity users frequent it. Our work contributes to theory by determining the underlying micro-foundations that produce what the literature calls a two-sided market and by highlighting how the standard two-sided pricing results arises only under very specific conditions. We also contribute to estimation by illustrating how the presence of multi-active users can challenge identification in network industries.
Subjects: 
platforms
one-sided markets
two-sided markets
multi-siding users
JEL: 
L10
L20
D21
D42
Document Type: 
Working Paper
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