Abstract
In two-sided networks, two parties interact on a platform, caring about the numbers of subjects on the other side. A typical problem, in this context, is setting prices for network services so as to get “both side on boards”. The standard approach in the literature considers the networks ability to convince both sides to join the network, whereas this paper consider an alternative setting, in which one side determines the price balance.
This case is exemplified by the market for meal voucher services in Italy, in which one agency organizes the procurement of services for the public sector, through a competitive auction. A formal model of optimal auction is illustrated and used to assess the current procurement scheme. The model reveals that the current system is inefficient and could be improved through increased flexibility and adaptation to local economic conditions.
Similar content being viewed by others
References
Caillaud, Bernard and Bruno Jullien. (2003). “Chicken & Egg: Competition Among Intermediation Service Providers” RAND Journal of Economics 24, 309–328.
Chakravorti, Sujit and Roberto Roson. (2004). “Platform Competition in Two-Sided Markets: The Case of Payment Networks.” Emerging Payments Occasional Paper Series n. 2004-09.
European Commission. (2002). “Case No. Comp/29.373—Visa International—Multilateral Interchange Fee.” Official Journal of the European Communities L318/17.
Evans, David. (2003). “The Antitrust Economics of Multi-Sided Platform Markets.” Yale Journal on Regulation 20(2), 325–382.
FIPE-Confcommercio. (2004). I buoni pasto per i dipendenti pubblici e privati—evoluzione del mercato mercato e prospettive legislative. Camera dei Deputati. http://www.fipe.it.
Gans, Joshua S. and Stephen P. King. (2003). “The Neutrality of the Interchange Fees in the Payment System.” Topics in Economic Analysis & Politics 3. article 1 located at http://www.bepress.com/bejeap/topics/vol3/iss1/art1.
Guthrie, Graeme and Julian Wright. (2003). “Competing Payment Schemes” Working Paper No. 0311, Department of Economics, National University of Singapore.
Reserve Bank of Australia. (2002). Reform of Credit Card Schemes in Australia IV: Final Reforms and Regulation Impact Statement. Sydney, Australia: Reserve Bank of Australia.
Rochet, Jean-Charles, and Jean Tirole. (2002). “Cooperation Among Competitors: The Economics of Payment Card Associations.” Rand Journal of Economics 33, 549–570.
Rochet, Jean-Charles and Jean Tirole. (2003). “Platform Competition in Two-Sided Markets.” Journal of European Economic Association 1, 990–1029.
Rochet, Jean-Charles and Jean Tirole. (2004). “Two-Sided Markets: An Overview”, mimeo, IDEI University of Toulouse. A preliminary version was presented at “The Economics of Two-Sided Markets” conference, held at the University of Toulouse, January.
Schiff, Aaron. (2003). “Open and Closed Systems of Two-Sided Networks.” Information Economics and Policy 15, 425–442.
Schmalensee, Richard. (2002). “Payment Systems and Interchange Fees.” Journal of Industrial Economics 50, 103–122.
Wright, Julian. (2003). “Optimal Card Payment Systems.” European Economic Review 47, 587–612.
Author information
Authors and Affiliations
Corresponding author
Rights and permissions
About this article
Cite this article
Roson, R. Auctions in a Two-Sided Network: The Market for Meal Voucher Services. Netw Spat Econ 5, 339–350 (2005). https://doi.org/10.1007/s11067-005-6207-0
Issue Date:
DOI: https://doi.org/10.1007/s11067-005-6207-0