grad-platform-economics
Platform Economics: Network Effects and Multi-Sided Markets
Overview
Platform economics studies businesses that create value by facilitating interactions between two or more distinct user groups. Unlike pipeline businesses that create value linearly, platforms exhibit network effects where each additional user increases value for others. The central challenge is the chicken-and-egg problem: neither side joins without the other.
When to Use
Trigger conditions:
- User is designing or evaluating a multi-sided platform business model
- User asks how to bootstrap a marketplace with no users on either side
- User needs to decide pricing: who to subsidize, who to charge
- User mentions "network effects", "marketplace", "platform strategy", or "chicken-and-egg"
When NOT to use:
- For linear/pipeline business models -> use Porter's value chain
- For competitive dynamics between platforms -> use grad-coopetition
- For innovation strategy within platforms -> use grad-ambidexterity
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