01727cas a2200265 a 4500 AALejournalIMF008886 230101c9999 xx r poo 0 0eng d 5.00 USD 9781451862133 1018-5941 BD-DhAAL BD-DhAAL Bolt, Wilko. Social Welfare and Cost Recovery in Two-Sided Markets / Wilko Bolt, Alexander Tieman. Washington, D.C. : International Monetary Fund, 2005. 1 online resource (14 pages) IMF Working Papers <strong>Off-Campus Access:</strong> No User ID or Password Required <strong>On-Campus Access:</strong> No User ID or Password Required Electronic access restricted to authorized BRAC University faculty, staff and students Using a simple model of two-sided markets, we show that, in the social optimum, platform pricing leads to an inherent cost recovery problem. This result is driven by the positive externality of participation that users on either side of the market exert on the opposite side. The contribution of this positive externality to social welfare leads the social planner to increase users' participation by setting prices at both sides of the market such that the total price is below marginal cost. This causes operational losses for the platform. Our result holds for both interior pricing and skewed pricing in two-sided markets. Mode of access: Internet WP imf Tieman, Alexander. IMF Working Papers; Working Paper ; No. 2005/194 Full text available on IMF http://elibrary.imf.org/view/journals/001/2005/194/001.2005.issue-194-en.xml IMF e-Library