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Chinese Journal of Management Science ›› 2010, Vol. 18 ›› Issue (3): 117-124.

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The Analysis of Tie-sale in Two-sided Markets

ZHANG Kai, LI Xiang-yang   

  1. School of Management, Harbin Institute of Technology, Harbin 150001, China
  • Received:2009-04-23 Revised:2010-05-20 Online:2010-06-30 Published:2010-06-30

Abstract: Tie-in sale is one of the most common promotion strategies of two sided platforms in real world. Separating buyers into two groups i.e.tying preference buyers and tying indifference buyers,the paper analyzes different tying preference that influences equilibrium pricing and relative social welfare,when two sided plat forms implement tying strategy as one of promotion strategies.The results show that tying has ambiguous effect on buyerentry equilibrium price and sellerentry equilibrium,which are set by two sided platforms in monopoly case and competition case.The price of tying productis set as single markets in both cases.In monopoly case,tying can increase the number of buyers and sellers,and the profit of platform.The platform which has less cost of tying product will get much more buyers,sellers and profitin competition case.The sumutility of buyers and sellers and social welfare will increase,when the number of tying preference buyers increases in both cases.

Key words: two-sided markets, two-sided platforms, tie-in sale, social welfare

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