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6 - Platform Design

Published online by Cambridge University Press:  05 October 2021

Paul Belleflamme
Affiliation:
Université Catholique de Louvain, Belgium
Martin Peitz
Affiliation:
Universität Mannheim, Germany
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Summary

In this chapter, we take a closer look at how the strategies of a profit-maximizing two-sided platform affect user participation and usage in a buyer-seller context. First, in Section 6.1, we introduce competition between sellers on the platform and analyze how this affects platform pricing and design; we also assess the impacts of the platform’s decisions on product variety. Next, in Section 6.2, we examine two specific design decisions that affect cross-group network effects: First, we revisit the issue of product variety, which a platform can also manage through its design of rating, reviews, and recommender systems; second, we examine the extent to which an intermediary wants to increase price transparency on the platform. Finally, in Section 6.3, we turn to design decisions that a platform can use to govern the sellers’ pricing strategies; the question here is whether platforms can increase their profit by letting sellers choose from a richer set of pricing strategies – for instance, by providing sellers with buyers’ personal data so as to facilitate differential pricing.

Type
Chapter
Information
The Economics of Platforms
Concepts and Strategy
, pp. 185 - 232
Publisher: Cambridge University Press
Print publication year: 2021

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  • Platform Design
  • Paul Belleflamme, Université Catholique de Louvain, Belgium, Martin Peitz, Universität Mannheim, Germany
  • Book: The Economics of Platforms
  • Online publication: 05 October 2021
  • Chapter DOI: https://doi.org/10.1017/9781108696913.008
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  • Platform Design
  • Paul Belleflamme, Université Catholique de Louvain, Belgium, Martin Peitz, Universität Mannheim, Germany
  • Book: The Economics of Platforms
  • Online publication: 05 October 2021
  • Chapter DOI: https://doi.org/10.1017/9781108696913.008
Available formats
×

Save book to Google Drive

To save content items to your account, please confirm that you agree to abide by our usage policies. If this is the first time you use this feature, you will be asked to authorise Cambridge Core to connect with your account. Find out more about saving content to Google Drive.

  • Platform Design
  • Paul Belleflamme, Université Catholique de Louvain, Belgium, Martin Peitz, Universität Mannheim, Germany
  • Book: The Economics of Platforms
  • Online publication: 05 October 2021
  • Chapter DOI: https://doi.org/10.1017/9781108696913.008
Available formats
×