Part 2

Question 1

Name 4 types of value creation for platforms

Answer 1

1. Search costs are reduced
2. Transaction costs related to stages of negotiation are reduced
3. Coordination costs are reduced
4. Communication costs are reduced

Question 2

What is a two sided platform?

Answer 2

Two sided platforms are markets connecting multiple user groups through appropriate pricing and governance. These platforms generate network externalities.

Question 3

What are direct network externalities?

Answer 3

Direct (or same side) network externalities; increasing the number of users on one side of the network, makes it either more or less valuable users on the same side of the network. Mostly positive for end users, mostly negative for complementors (more competition)

Question 4

What are indirect network externalities?

Answer 4

Indirect (or cross side) network externalities; increasing the number of users on one side of the network, makes it either more or less valuable to users on the other side. Mostly postive for complementors; potential consumer base, larger market to exploit. Postive for end consumers but also can be negative

Question 5

Which choises are there with choosing the subsidy side?

Answer 5

1. The side with the lowest cross side price elasticity
2. The side with the lowest negative same side network effects
3. The side with the lowest likelihood of multi-home
   The side, for which these factors are less present, should be subsidized

Question 6

What is meant by the subsidy side?

Answer 6

Prices below the level of what would have been charged in an independent, or single side market

Question 7

What is meant by the money side?

Answer 7

Prices above the level of what would have been charged in an independent or single side market

Question 8

What are the three platform key control mechanisms?

Answer 8

1. Input control
2. Bavioural control
3. Output control

Question 9

What is meant with platform exclusivity?

Answer 9

This involves preventing a complementor from accessing rival platforms, with the most significant impact on platform sales

Question 10

What is meant by Category exclusivity?

Answer 10

Here, a platform grants privileged access to a complementer in a specific category, ensuring quality for users

Question 11

What is meant with ecosystem control?

Answer 11

Dominant platforms can establish rules and standards

Question 12

What are the three strategies when competing for the market?

Answer 12

1. Establish a large installed base quickly and visibly e.g. By introductory prices
2. Public commitments to low prices over the long term
3. Control consumer expectations (create excitement and manage expectations)