The Contractual Nature of Two-Sided Platforms: A Research Note
EALR, V. 5, nº 1, p. 48-61, Jan-Jun, 2014
13 Pages Posted: 7 Aug 2013 Last revised: 3 Jul 2014
Date Written: August 6, 2013
The present paper investigates the organizational nature of two-sided platforms. The article departs from the classical case of an industry that presents some intrinsic characteristics which give to it the status of a two-sided market. Specifically, the paper considers that the decision of a firm to operate as a traditional merchant or as a platform is based on a bargaining process between the firm and its suppliers, resulting in an incomplete contract which is supported by a particular combination of price and non-price instruments. Founded on this approach, this essay addresses some fundamental issues in the economics of hybrid forms in two-sided platforms through the examination of the decision of a supermarket to operate as a conventional retailer or as a platform.
Keywords: Two-sided Platforms, Merchant, Incomplete Contracts, Organizational Forms
JEL Classification: L22, D23, D86
Suggested Citation: Suggested Citation