Two-Sided Markets

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Whenever agents to a transaction (for example, consumers and suppliers) interact through intermediaries or a 'platform' that is controlled by a third party, the agents are using a two-sided platform. Two-sided platforms are common. However, if a two-sided platform involves network effects, so that participants on one side of the platform care about the number of participants on the other side of the platform, it is a two-sided market. These markets raise a variety of important issues for economists and policy-makers. In this article, I briefly explain the nature of two-sided markets and, using simple examples, show how they can behave very differently to standard one-sided markets.

Original languageEnglish
Pages (from-to)247-258
Number of pages12
JournalAustralian Economic Review
Issue number2
Publication statusPublished - Jun 2013

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