Multisided Platforms and Markets: A Survey of the Theoretical Literature

Abstract

Platforms are everywhere. The rise of Uber, Netflix, and Facebook has attracted a lot of attention to this business model. However, despite its relevance and presence in the digital economy, the definition of platforms, their main characteristics, the intuitions about how they set prices, solve coordination issues, or choose their ownership structure seem to be scattered in many papers. This review attempts to organize the last two decades of research on multisided platforms around three essential elements of platforms: price structure, network effects, and control rights. We highlight which definitions are used in the literature, how they are related to the defining characteristics of platforms, and what research has been made on those characteristics. We pay special attention to the research done on pricing, coordination problems, and ownership structure. We conclude by reviewing the theoretical evidence around monopolization and competition policy in multisided markets.

Speculative Capture: Literacy after Platformization

“…Inasmuch as the data processes within an AI platform are useful for extrapolating predictions that can be recursively reincorporated into its technical dimension to approximate “adaptability,” they are also useful outside of the platform, as sources of value in speculative finance (Williamson, 2021). This is because platforms are what economists call “multi‐sided markets” (Sanchez‐Cartas & León, 2021): they do not just process data to deliver services to their users (i.e., the consumer‐facing side); their owners can also aggregate this data to derive insights for future product enhancements (i.e., the development‐facing side) or to secure advantages over their competitors (i.e., the business‐facing side). The imbrication of these “sides” means that the speculative logics that underwrite AI platforms' social and technical dimensions can't be easily disentangled from the speculative growth targets of AI companies, or the speculative investments of venture capital firms that are betting on such companies to usher in new economic and labor relations (Komljenovic, 2021; Williamson, 2023).…”

Digital platforms: Perceived criteria of success, importance of work design, occupational safety and health for present and prospective digital platforms

“…The semi-standardised interviews were designed with a total of nine key-questions, each addressing different categories, such as the organisational structure of platforms, reasons for success or failure of platforms, distinguishing features of platforms, legal/social/ethical/ergonomic conditions of platforms (see Table 1) [23][24][25][26][27]. Deviation from the guideline was possible at any time.…”

Innovation process in the business ecosystem: the four cooperations practices in the media platform

“…The two-sided/multi-sided business is not an easy or simple concept, and more than 80 different models have been developed (Sanchez-Cartas and Leon, 2019). Despite some criticism that sparked among scholars and practitioners on the emerging of this concept that eventually all businesses and industries are multi-sided, what two-sided/multi-sided construct has posed as the differentiating factor is, in fact, the membership fees which serves as the generator of multi-sidedness because they modify the volume of transactions.…”

“…Despite some criticism that sparked among scholars and practitioners on the emerging of this concept that eventually all businesses and industries are multi-sided, what two-sided/multi-sided construct has posed as the differentiating factor is, in fact, the membership fees which serves as the generator of multi-sidedness because they modify the volume of transactions. To resolve some of the challenges, Sanchez-Cartas and Leon (2019) classified the various models by examining the nature of fees (membership or use), the number of platforms (monopoly, duopoly or N -platforms) and the possibility of being in one or several platforms at the same time (single-homing or multi-homing). Also, by borrowing the studies of Evans and Schmalensee, 2005 for the media industries, Filistrucchi (2008) and Filistrucchi et al (2012), the two-sided/multi-sided businesses are described to have three groups of players: (1) market-makers who enable and monitor transactions, (2) audience-makers who match advertisers to audiences and (3) demand-coordinators who do not sell transactions like the market makers nor sell messages like the audience-maker but plays a significant role in capturing the market.…”