The Effects of Conventional Policies on Price Structure and Consumer Surplus in a Two-sided Market–an Economics Experiment

This study investigates the effects of different conventional policies on price structure and consumer surplus in a two-sided market monopoly. Consistent with theory, in a laboratory environment, the majority of subjects charge a price below cost, even if there is no threat of entry by new competitors. However, the prices do not reach the predicted prices. When three different policies are imposed in this market, the prices change according to the theory. Results regarding changes in consumer surplus are reported as well. These results suggest that policymakers should distinguish between one-sided and two-sided markets in determining optimal policies.