Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/245448 
Year of Publication: 
2021
Series/Report no.: 
CESifo Working Paper No. 9267
Publisher: 
Center for Economic Studies and ifo Institute (CESifo), Munich
Abstract: 
This paper analyzes the generalized quality differentiation model in multi-sided markets with positive externalities, which leads to new insights into the optimal pricing structure of the firm. We find that quality differentiation for users on one side affects not only the side involving differentiation but also the other side due to cross-side network externalities, thereby affecting the pricing structure of multi-sided firms. In addition, quality differentiation affects the strategic relationships among all the choice variables for the platform, enabling the platform to strategically use quality differentiation to raise its profits.
Subjects: 
multi-sided market
quality differentiation
platform business strategies
JEL: 
D43
L11
L42
Document Type: 
Working Paper
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