The Dominant Firm Equilibrium In An Asymmetrical Two-sided Market

In this paper, we will investigate a price competition game between two matchmakers in an asymmetrical two-sided market with network externality. The market is asymmetrical because in one side, the agents are sure about their surplus from a trade with the particular agent on the other side, but on the other side of the market, the agents are uncertain with their surplus, they only have some estimation about the surplus, and we assume the surplus is uniformly distributed. There are two matchmakers in this market, and two price instruments are optional to the matchmakers, the registration fee and the transaction fee. We will analysis the competition behaviors in different situation.We will analyze the behavior of the two competing match-makers by investigating the existence of the dominant-firm equilibrium under three different market structures. In the first two cases we assume that the agent can only register to one matchmaker in the same time, that is to say the services provided by the matchmakers are exclusive. In the first case, the matchmakers can only charge registration fees, so the dominant matchmaker who has the whole market share can keep this share by a sophistic price strategy; In the second case, the matchmakers can charge both the registration fees and transfer fees, in this case, the dominant matchmaker can not keep his market share. In the last case, the agents canlink to both of the matchmakers in the same time. In this case, the dominant matchmaker can keep his market share, but he can not get any profit.