The Contractual Nature of Two-Sided Platforms: a research note

Authors

  • Guilherme Fowler de Avila Monteiro Insper Institute of Education and Research
  • Elizabeth M. M. Q. Farina University of Sao Paulo
  • Rubens Nunes University of Sao Paulo

DOI:

https://doi.org/10.18836/2178-0587/ealr.v5n1p153-165

Abstract

The present paper discusses 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.

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Published

2014-06-01