Multi-Sided Platforms: From Microfoundations to Design and Expansion Strategies

26 Pages Posted: 9 Jan 2007

See all articles by Andrei Hagiu

Andrei Hagiu

Boston University - Questrom School of Business

Date Written: April 3, 2009

Abstract

Multi-sided platforms (MSPs), which bring together two or more interdependent groups of customers, have recently risen to economic and business prominence in many industries. This paper first lays out a simple micro-founded framework which aims to organize academic and managerial thinking about MSPs. It argues that any MSP performs one or both among two fundamental functions: reducing search costs and reducing shared transaction costs among its multiple sides. Using a variety of illustrations, the framework is then used to formulate general principles driving MSP design and expansion strategies: choosing the relevant platform "sides", deciding which fundamental activities to perform and trading off depth against scope of MSP functions.

Keywords: Monopolistic competition, Product Variety

JEL Classification: L1, L2, L8

Suggested Citation

Hagiu, Andrei, Multi-Sided Platforms: From Microfoundations to Design and Expansion Strategies (April 3, 2009). Harvard Business School Strategy Unit Working Paper No. 09-115 , Available at SSRN: https://ssrn.com/abstract=955584 or http://dx.doi.org/10.2139/ssrn.955584

Andrei Hagiu (Contact Author)

Boston University - Questrom School of Business ( email )

595 Commonwealth Avenue
Boston, MA MA 02215
United States

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
2,112
Abstract Views
6,901
rank
8,864
PlumX Metrics