Two sided markets Flashcards

1
Q

Basic idea

A

you must attract one side in order to attract the other side

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2
Q

Two sided platform coordination problem

A

which side comes first

profit maximising platform can break the coordination problem - subsidize one side

on side represents an input cost for the other side

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3
Q

Ways to address the coordination problem

A

Reduce transaction costs
designing the price structure in a way that incentivizes joining
Partially integrate with one side of the market and fully disintegrate at a later point

example amazon bookstore - amazon was a seller, before they became just a platform

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4
Q

a service is a two sided platform if

A

there are two distinct groups of customers that need each other (externality)
groups cannot get together easily
setting prices to get both sides onboard
no control on final price set by one side

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5
Q

Features of two sided platforms

A

network effects
pricing

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6
Q

Discuss network effects in two sided platforms

A

adoption externalities
cross group effects
intragroup network effects

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7
Q

Discuss pricing in two sided platforms

A

Asymmetric pricing

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8
Q

Costs of control

A

services
productgs

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9
Q

benefits of control

A

scale effects
aggregation (complementarities)
buyer/seller experience
solving market failers

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10
Q
A
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