two-sided market

The Age of Extraction: How Tech Platforms Conquered the Economy and Threaten Our Future Prosperity

by Tim Wu  · 4 Nov 2025  · 246pp  · 65,143 words

. “agora,” accessed June 7, 2024, https://www.britannica.com/​topic/​agora. BACK TO NOTE REFERENCE 1 Jean-Charles Rochet and Jean Tirole, “Platform Competition in Two-Sided Markets,” Journal of the European Academic Association 1, no. 4 (2003). BACK TO NOTE REFERENCE 2 George A. Akerlof, “The Market for ‘Lemons’: Quality Uncertainty and

Working in Public: The Making and Maintenance of Open Source Software

by Nadia Eghbal  · 3 Aug 2020  · 1,136pp  · 73,489 words

substitutable content they create decision fatigue for consumers.362 Subscription models can operate like a freemium model, but they get even more interesting as a two-sided market. In a freemium model, a creator gives away some of their content for free, but restricts other content to those with paid subscriptions. The free

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content helps creators grow their reputation via public network effects. In a two-sided market, paying subscribers subsidize all of the content for nonpaying readers, under the assumption that creators aren’t actually selling content but a sense of membership

The Gig Economy: A Critical Introduction

by Jamie Woodcock and Mark Graham  · 17 Jan 2020  · 207pp  · 59,298 words

is to create a digital context in which buyers of labour power are able to connect with sellers of labour power (what economists call a ‘two-sided market’). Uber’s platform connects people who want a taxi ride with people who are willing to provide taxi rides. Fiverr’s platform connects people looking

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shift maximal risk and minimal reward onto workers. Platform companies achieve this through technologies and infrastructures of connectivity that allow work to be organized via two-sided markets, political environments that impose few regulations, a zeitgeist that values flexibility, and a backdrop of increasing inequality that leads ever more workers to make the

Arriving Today: From Factory to Front Door -- Why Everything Has Changed About How and What We Buy

by Christopher Mims  · 13 Sep 2021  · 385pp  · 112,842 words

that such marketplaces for labor have always meant. As one economist who worked with actual Uber data discovered, the wage that workers in such fluid, two-sided markets for unskilled labor inevitably garner is whatever the local minimum wage happens to be. It would be a future for truck drivers not unlike our

Matchmakers: The New Economics of Multisided Platforms

by David S. Evans and Richard Schmalensee  · 23 May 2016  · 383pp  · 81,118 words

they must use nontraditional, counterintuitive strategies to make money and survive. After working out a pioneering economic model, they wrote a paper, “Platform Competition in Two-Sided Markets,” which began circulating among economists in 2000.18 Economists now call these businesses multisided platforms because some of them actually facilitate interactions between more than

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computer chips, the Internet, the web, broadband communications, programming languages and operating systems, and the Cloud. Airbnb, for example, benefits from all of these technologies. Two-sided market: The original name used to refer to industries that had “two-sided platforms.” Two-sidedness is a characteristic of businesses, not always of industries, however

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Hottest Spot in Town,” Fortune, August 14, 2009, http://fortune.com/2009/08/14/opentable-the-hottest-spot-in-town/. 2. They are also called two-sided markets, intermediaries, and brokers. A few years ago, we tried calling them “catalysts,” since, like chemical catalysts, they encourage reactions, but the name has not caught

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making transactions. 17. “OpenTable Terms of Use,” http://www.opentable.com/info/agreement.aspx. 18. See Jean-Charles Rochet and Jean Tirole, “Platform Competition in Two-Sided Markets,” Journal of the European Economic Association 1, no. 4 (2003). As is increasingly common in academic economics, their paper was widely circulated several years before

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it appeared in print. The term “two-sided market” has fallen out of favor, as it has become clear that two- or multisidedness is an attribute of individual businesses, not necessarily of all businesses

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discussion of this paper and other early economic papers on multisided platforms is given by Richard Schmalensee, “An Instant Classic: Rochet & Tirole, Platform Competition in Two-Sided Markets,” Competition Policy International 10, no. 2 (2014). 19. In suburban America, they even give people free parking and, often, entertainment. Single-sided businesses don’t

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, Special Issue: Strategy Content Research (1988). 6. “Google Ngram Viewer,” https://books.google.com/ngrams. 7. Jean-Charles Rochet and Jean Tirole, “Platform Competition in Two-Sided Markets,” Journal of the European Economic Association 1, no. 4 (2003). 8. This discussion is based largely on Andrei Hagiu, “The Last DVD Format War?” Case

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participation on that side. We hasten to point out that this is not a general prescription. Jean-Charles Rochet and Jean Tirole, “Platform Competition in Two-Sided Markets,” Journal of the European Economic Association 1, no. 4 (2003). 18. We are ignoring costs for now to keep things simple. More generally, pricing structure

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, 19, 35 microchips, 40–41 operating systems, 43–44 pioneering platforms, 37 checklist for, 150–155 retail creative destruction and, 181–196 “Platform Competition in Two-Sided Markets” (Rochet & Tirole), 15 platforms, 16–17 foundational, 40 multi-homing with, 28 reseller, 107–108 sizing, 124–126 vertically integrated, 106–107 PriceGrabber, 186 price

Empirical Market Microstructure: The Institutions, Economics and Econometrics of Securities Trading

by Joel Hasbrouck  · 4 Jan 2007  · 209pp  · 13,138 words

incentives. Perhaps the best-known designated dealer is the NYSE specialist. The specialist has many roles and responsibilities, but an important one is maintaining a two-sided market when there is nothing on the limit order book and no one else on the floor bidding or offering. Establishing the proper incentives for designated

Trading Risk: Enhanced Profitability Through Risk Control

by Kenneth L. Grant  · 1 Sep 2004

scale up in size, the need to operate on both sides of a given market becomes more pronounced, and I strongly urge this kind of two-sided market orientation as being one of the best means of maximizing risk-adjusted profitability. However, I should tell you that this challenge is, in my experience

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cause all securities to move in lockstep with one another. Perhaps as important, Adjusting Portfolio Exposure (Rule 2) 137 the presence of some well-adapted two-sided market exposure will greatly enhance your ability to stay with your best ideas—across all market cycles—and thus capitalize in those situations when you feel

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profit or at a loss. When viewed at a safely objective distance from the actual portfolio management process, it is easy to see how a two-sided market orientation, with one side serving largely as instruments of risk control, could offer better risk-adjusted returns than one that focused exclusively on either longs

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–222 258 Transactions-level analysis: benefits of, 79 core statistics, 161–168 database, overview, 156–158 position snapshot statistics, 160–161 transaction defined, 158–160 Two-sided market, 135–137, 140 Underlying markets, 117 Underlying price, 149–150 Unit impact ratio, 187 Value at Risk (VaR) calculation: accuracy testing, 98–99, 103 and

Broken Markets: How High Frequency Trading and Predatory Practices on Wall Street Are Destroying Investor Confidence and Your Portfolio

by Sal Arnuk and Joseph Saluzzi  · 21 May 2012  · 318pp  · 87,570 words

market maker wanted to place an offer to only sell stock, he would have to place a stub quote as a bid to create a two-sided market. When Accenture traded at $0.01 during the Flash Crash, the bid that was hit was a stub quote. According to the SEC Flash Crash

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dominant) type of pseudo market maker act in the interest of the markets when we really need them? Will they step up and maintain a two-sided market, or will they simply shut off the machines and walk away? Even worse, will they seek even further profit and exacerbate the downside?”34 Zero

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on the market cap of the stock and a minimum order life on all orders. 3. To reward market makers for creating a more stable two-sided market, there also needs to be a minimum spread that is wider than a penny. No doubt, our critics will claim that this alternative is going

Machine, Platform, Crowd: Harnessing Our Digital Future

by Andrew McAfee and Erik Brynjolfsson  · 26 Jun 2017  · 472pp  · 117,093 words

low prices, since doing so will maximize its revenue. Figure 8 Most demand curves are not straight lines. Sometimes, they have this shape. But in two-sided markets, simply working its way down the demand curve is only a small part of the story. To better understand Uber’s pricing decisions, let’s

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prospered. For instance, credit cards provide a valuable service to both consumers and merchants. In theory, credit card issuers could charge both halves of this two-sided market. In practice, they sometimes do exactly that: charging annual fees to consumers and processing fees of 2% or more to merchants. In fact, in the

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users, they give them away for free to maximize demand. That way, they make more money on merchant fees on the other half of the two-sided market. By lowering the annual fees and other user charges on their cards, credit card issuers can not only increase the market share of the cards

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direct cash bonuses for using a card. Charging negative prices for a product or service would make little sense for ordinary goods, but for a two-sided market it can be a sustainable and consistently profitable strategy. Giving It Away and Locking Them In A number of important tactical and strategic decisions remain

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that each side of the market gets from participating and aren’t too greedy. Once you understand the logic of two-sided markets, the next step is to apply it to multisided markets. Two-sided markets often become multisided markets with dozens or even thousands of distinct subgroups interacting through the platform. For instance, iTunes is

The Inner Lives of Markets: How People Shape Them—And They Shape Us

by Tim Sullivan  · 6 Jun 2016  · 252pp  · 73,131 words

practice of selling items to the highest bidder, was launched, with thirty pages of algebra, in the Journal of Finance in 1961. Recent work on two-sided markets like Uber or Google that sit between customers and drivers or between web searchers and advertisers has helped to guide the strategies of companies looking

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(as in, “let’s buy Intel as the first step in our global domination of the microprocessor business [cue evil laughter]”). Economists instead talk about two-sided markets or, as the case may be, multisided markets. You might reasonably ask what market doesn’t have two sides. You go to the supermarket, go

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’s value, so both sides stick around to play. (Think about the value proposition at eBay if conmen dominated its sellers’ ranks.) Looking at a two-sided market through this lens—as a space where people meet and not just where trade takes place—is a new angle to understanding exchange. The difference

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between one-sided and two-sided markets is subtle but meaningful. It changes the way that we might approach the market as a business or a consumer. And it affects how a

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richly rewarded for it. While every multisided market has its own eccentricities, there are some overarching principles like these, which can help to clarify where two-sided markets are most needed, and why they take the particular forms they do. The Variety of Rules Market makers are confronted with many choices in the

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based on misunderstandings of what makes a platform tick. Platform Builder as Internet Cop The economist who did the most to formalize our understanding of two-sided markets is Jean Tirole, a Frenchman who won the Nobel Prize in 2014.10 Within economics, Tirole is known for his superhuman productivity and, relatedly, his

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also applied himself to the question of how to regulate credit cards, which in turn led to a series of papers that aimed to understand two-sided markets more broadly: examining why they exist, what makes them different from the one-sided variety, and how competing platforms like Visa and Amex vie for

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on both sides of their respective markets, and providing some guiding principles for builders of two-sided markets and the authorities that regulate them. Much of Tirole’s work on platforms takes as its starting point that a two-sided market is one where participants on either side couldn’t simply find one another and strike

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to think about it. One of Tirole’s platform insights—the one with the most tangible consequences for the person on the street—is that two-sided markets are in many ways just a particular case of network externalities, one that works across the two sides of the platform. And that leads to

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wide gap between what each side of the market pays to meet on Google. This state of affairs is entirely common in the realm of two-sided markets: many credit card companies don’t charge cardholders or even give them discounts, while merchants pay through the nose; shopping malls, a

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two-sided market from an earlier era, charge their tenants rent, while offering free parking and other inducements to attract shoppers. Sometimes the way that platforms charge can

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, that’s a fantastic gig. It’s the job of government regulators to reign in the power of the all-powerful market maker in many two-sided markets.17 The credit card market also serves to indicate why the inequitable treatment of participants on different sides of the platform is so common. Although

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. But often we have one default choice that we use for most of our purchases. We are single-homing as credit card users. If a two-sided market is only useful when both sides are on board, then there’s intense rivalry to enlist the single-homers, who can shop around among competing

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get together to do business. 6. Jean Tirole and Jean-Charles Rochet convey this point more precisely in a 2006 article where they show that two-sided markets are only necessary when the Coase Theorem fails. This theorem, more a conjecture provided by economist Ronald Coase, essentially argues that free markets maximize efficiency

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, which had existed for a while, where you had to pay the full balance at the end of every month. 10. Tirole’s work on two-sided markets was done with Jean-Charles Rochet, an economist at the University of Zurich. 11. Paul Samuelson, Economics (Cambridge, MA: MIT Press, 1988; first published 1948

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auction listings, 94–97 concerns on model for, 43, 46, 48 on seller motivation for giving to charities, 73–75 start of, 39–41 as two-sided market, 109, 119 e-commerce, 41–43, 52–55 “The Economic Organization of a P.O.W. Camp” (Radford), 7 economics applied theory in, 45, 50

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gang, 61 Shapley, Lloyd, 134–136, 137–138, 163–164 Shapley-Gale algorithm, 137–140 Shi, Peng, 148 Shleifer, Andrei, 180–181 shopping malls, as two-sided markets, 122–123 Shoup, Carl, 85 sick organizations, 142–143 signaling model applications of, 66–68 commitment signs, 62–66 competitive signaling, 69–71 integrity, 71

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-interval auctions, 82 Tirole, Jean, 117–118 Torres, Robert, 61 Toshiba’s HD DVD format war, 125–126 traditional economics, 110, 133 Trafigura company, 168 two-sided markets, 108–112, 118–124 Uber, 2, 3, 5, 16, 50, 109, 111, 119, 125, 128, 129, 132, 169–173 unethical conduct, in competition, 180–181

The Black Box Society: The Secret Algorithms That Control Money and Information

by Frank Pasquale  · 17 Nov 2014  · 320pp  · 87,853 words

The Middleman Economy: How Brokers, Agents, Dealers, and Everyday Matchmakers Create Value and Profit

by Marina Krakovsky  · 14 Sep 2015  · 270pp  · 79,180 words

Hit Refresh: The Quest to Rediscover Microsoft's Soul and Imagine a Better Future for Everyone

by Satya Nadella, Greg Shaw and Jill Tracie Nichols  · 25 Sep 2017  · 391pp  · 71,600 words

Platform Scale: How an Emerging Business Model Helps Startups Build Large Empires With Minimum Investment

by Sangeet Paul Choudary  · 14 Sep 2015  · 302pp  · 73,581 words

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by Sangeet Paul Choudary, Marshall W. van Alstyne and Geoffrey G. Parker  · 27 Mar 2016  · 421pp  · 110,406 words

The Ethical Algorithm: The Science of Socially Aware Algorithm Design

by Michael Kearns and Aaron Roth  · 3 Oct 2019

Value of Everything: An Antidote to Chaos The

by Mariana Mazzucato  · 25 Apr 2018  · 457pp  · 125,329 words

The Payoff

by Jeff Connaughton  · 202pp  · 66,742 words

Virtual Competition

by Ariel Ezrachi and Maurice E. Stucke  · 30 Nov 2016

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by Tom Eisenmann  · 29 Mar 2021  · 387pp  · 106,753 words

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Stigum's Money Market, 4E

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by Roger McNamee  · 1 Jan 2019  · 382pp  · 105,819 words

High-Frequency Trading

by David Easley, Marcos López de Prado and Maureen O'Hara  · 28 Sep 2013

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by Kevin Kelly  · 6 Jun 2016  · 371pp  · 108,317 words

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by Arun Sundararajan  · 12 May 2016  · 375pp  · 88,306 words

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by Lauren Turner Claire, Laure Claire Reillier and Benoit Reillier  · 14 Oct 2017  · 240pp  · 78,436 words

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by Michael A. Cusumano, Annabelle Gawer and David B. Yoffie  · 6 May 2019  · 328pp  · 84,682 words

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by Alex Moazed and Nicholas L. Johnson  · 30 May 2016  · 324pp  · 89,875 words

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by Mary L. Gray and Siddharth Suri  · 6 May 2019  · 346pp  · 97,330 words

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by Nick Srnicek  · 22 Dec 2016  · 116pp  · 31,356 words

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by Jack D. Schwager  · 5 Oct 2012  · 297pp  · 91,141 words

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by Tarleton Gillespie  · 25 Jun 2018  · 390pp  · 109,519 words

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by Donald Sull and Kathleen M. Eisenhardt  · 20 Apr 2015  · 294pp  · 82,438 words

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by Roger L. Martin  · 28 Sep 2020  · 600pp  · 72,502 words

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How to DeFi

by Coingecko, Darren Lau, Sze Jin Teh, Kristian Kho, Erina Azmi, Tm Lee and Bobby Ong  · 22 Mar 2020  · 135pp  · 26,407 words