Two-Sided Centrality and Optimal Pricing of Two-Sided Platforms

Abstract

We develop a two-sided centrality concept to measure the cross network externalities, and build this new concept into a monopolistic two-sided platform model. Two-sided centrality can be employed in characterizing the behaviors of marginal end-users. In this setting, the platform will take into account not only the end-users’ quantities but also the end-users’ heterogeneities in its optimal price setting.