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Lernmaterialien für Management and Economics of Platforms an der LMU München

Greife auf kostenlose Karteikarten, Zusammenfassungen, Übungsaufgaben und Altklausuren für deinen Management and Economics of Platforms Kurs an der LMU München zu.

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One sided market (or traditional market)

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  1. A firm supplies a good or a service.

  2. Price depends on the cost structure of the firm, the competitive environment and the elasticity of demand.

Consumers choose to buy or not the good. Their decision depends on their tastes and budget constraints.

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Two-sided markets can be categorized:
Audience-makers

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match advertisers to audiences.
• E.g. Web search, social media, newspapers.

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TESTE DEIN WISSEN

Two-sided markets can be categorized:
Market-makers

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TESTE DEIN WISSEN

enable members of distinct groups to transact with each others.
• E.g. Marketplaces, online dating, interim employment agency.

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TESTE DEIN WISSEN

Two-sided markets can be categorized:
Demand coordinators

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TESTE DEIN WISSEN

do not strictly sell transaction. They make goods and services which
generate indirect network effects.
• E.g. Payment systems, video games consoles, operating systems.

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TESTE DEIN WISSEN

Transactions costs

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TESTE DEIN WISSEN

Transactions costs are costs incurred by agents when making an economic exchange.

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Transactions costs can be classified in three groups

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Search and information costs, which are related to the effort needed to compare prices
and quality of available alternatives.

Bargaining costs, which are related to the effort needed to find a good agreement with
the other agent.

Policing and enforcement costs
, which are related to ensuring that the other agent sticks to the contract and, if not, taking actions.

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Standard battles
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TESTE DEIN WISSEN
Circumstances of a Standard Battle
§ In a standard battle multiple firms compete for the market and not in the market.
§ A standard battle is more likely if
• firms are symmetric in their market and technology positions,
• the standards battle does not delay consumer acceptance of the technology, and
• intra-technology competition is likely to dissipate potential industry profits.

In a standard battle, firms can use the following strategies
§ Establishing a large installed base quickly and visibly e.g. by dynamic or penetration pricing
§ Public commitments to low prices over the long term
§ Managing consumers’ expectations
§ Strategic pre-announcement
§ Improve the relative qualities of the own technology
§ Offering a sufficient supply of complementary goods
§ Pre-emption (trade off between quality and timing)
§ Licensing to build up a critical mass of hard- and/or software
§ Acquiring a rival firm

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TESTE DEIN WISSEN
Direct network effects

Positive

Negative

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TESTE DEIN WISSEN
Direct network effects
when each group’s members have references regarding the number of users in their own group.

Positive
“I prefer to purchase games on Steam rather than on Epic Games because most of my friends
use Steam and I like to communicate with them via the chat provided by the platform.”

Negative
“I only develop mobile games for iOS because there are already a lot developed for Android,
what would make competition tough.”
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TESTE DEIN WISSEN
Indirect network externalities (cross-side or cross-group externalities)

Positive

Negative
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TESTE DEIN WISSEN
Indirect network externalities (cross-side or cross-group externalities)
when members of at least one group have a preference regarding the number of users in the
other group.

Positive
“I choose Visa rather than Mastercard because there are more merchants accepting Visa where
I live”

Negative
“I use DailyMotion rather than Youtube because there is too much advertising on Youtube”

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TESTE DEIN WISSEN
First party vs. third party complementors
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The platform owner has the alternative to engage with first-party complementors (FPC) or thirdparty
complementors (TPC).

While third-party complementors are independent producers/developers from the platform, firstparty
complementors are offered by the platform owner on its own marketplace.

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TESTE DEIN WISSEN
first-party complementors can generate three scenarios
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TESTE DEIN WISSEN
No impact
The integration has no if little effect on third-party complementors and users can still
complete the same tasks without major change and effort
• Δ0 in the demand of third-party complements AND ↑ demand of first-party
complements

Substitution effect
Users derive additional utility from the tighter integration between the platform owner
and first-party complementors à substitution effect
• ↓ demand of third-party complements AND ↑ demand of first-party
complements

Indirect positive spillovers
The integration fosters sharing as a common behavior among users à indirect
positive spillovers on third-party complements
• ↑ demand of third-party complements AND ↑ demand of first-party
complements
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TESTE DEIN WISSEN
Pro and cons of standardization
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Pros of standard setting
- Standards lead to faster market growth.
- Consumers benefit as search and switching costs are reduced.
- The risk of excess inertia is lowered.

Cons of standards setting
-Standards reduce the scope for product differentiation.
-Price competition can be intense among firms using the same standard.
- The selected standard may not be the efficient one. Because of lock-in effects and excess
inertia, it may become difficult to switch to a better one.

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  • 596519 Karteikarten
  • 11346 Studierende
  • 265 Lernmaterialien

Beispielhafte Karteikarten für deinen Management and Economics of Platforms Kurs an der LMU München - von Kommilitonen auf StudySmarter erstellt!

Q:

One sided market (or traditional market)

A:
  1. A firm supplies a good or a service.

  2. Price depends on the cost structure of the firm, the competitive environment and the elasticity of demand.

Consumers choose to buy or not the good. Their decision depends on their tastes and budget constraints.

Q:

Two-sided markets can be categorized:
Audience-makers

A:

match advertisers to audiences.
• E.g. Web search, social media, newspapers.

Q:

Two-sided markets can be categorized:
Market-makers

A:

enable members of distinct groups to transact with each others.
• E.g. Marketplaces, online dating, interim employment agency.

Q:

Two-sided markets can be categorized:
Demand coordinators

A:

do not strictly sell transaction. They make goods and services which
generate indirect network effects.
• E.g. Payment systems, video games consoles, operating systems.

Q:

Transactions costs

A:

Transactions costs are costs incurred by agents when making an economic exchange.

Mehr Karteikarten anzeigen
Q:

Transactions costs can be classified in three groups

A:
Search and information costs, which are related to the effort needed to compare prices
and quality of available alternatives.

Bargaining costs, which are related to the effort needed to find a good agreement with
the other agent.

Policing and enforcement costs
, which are related to ensuring that the other agent sticks to the contract and, if not, taking actions.

Q:
Standard battles
A:
Circumstances of a Standard Battle
§ In a standard battle multiple firms compete for the market and not in the market.
§ A standard battle is more likely if
• firms are symmetric in their market and technology positions,
• the standards battle does not delay consumer acceptance of the technology, and
• intra-technology competition is likely to dissipate potential industry profits.

In a standard battle, firms can use the following strategies
§ Establishing a large installed base quickly and visibly e.g. by dynamic or penetration pricing
§ Public commitments to low prices over the long term
§ Managing consumers’ expectations
§ Strategic pre-announcement
§ Improve the relative qualities of the own technology
§ Offering a sufficient supply of complementary goods
§ Pre-emption (trade off between quality and timing)
§ Licensing to build up a critical mass of hard- and/or software
§ Acquiring a rival firm

Q:
Direct network effects

Positive

Negative

A:
Direct network effects
when each group’s members have references regarding the number of users in their own group.

Positive
“I prefer to purchase games on Steam rather than on Epic Games because most of my friends
use Steam and I like to communicate with them via the chat provided by the platform.”

Negative
“I only develop mobile games for iOS because there are already a lot developed for Android,
what would make competition tough.”
Q:
Indirect network externalities (cross-side or cross-group externalities)

Positive

Negative
A:
Indirect network externalities (cross-side or cross-group externalities)
when members of at least one group have a preference regarding the number of users in the
other group.

Positive
“I choose Visa rather than Mastercard because there are more merchants accepting Visa where
I live”

Negative
“I use DailyMotion rather than Youtube because there is too much advertising on Youtube”

Q:
First party vs. third party complementors
A:
The platform owner has the alternative to engage with first-party complementors (FPC) or thirdparty
complementors (TPC).

While third-party complementors are independent producers/developers from the platform, firstparty
complementors are offered by the platform owner on its own marketplace.

Q:
first-party complementors can generate three scenarios
A:
No impact
The integration has no if little effect on third-party complementors and users can still
complete the same tasks without major change and effort
• Δ0 in the demand of third-party complements AND ↑ demand of first-party
complements

Substitution effect
Users derive additional utility from the tighter integration between the platform owner
and first-party complementors à substitution effect
• ↓ demand of third-party complements AND ↑ demand of first-party
complements

Indirect positive spillovers
The integration fosters sharing as a common behavior among users à indirect
positive spillovers on third-party complements
• ↑ demand of third-party complements AND ↑ demand of first-party
complements
Q:
Pro and cons of standardization
A:
Pros of standard setting
- Standards lead to faster market growth.
- Consumers benefit as search and switching costs are reduced.
- The risk of excess inertia is lowered.

Cons of standards setting
-Standards reduce the scope for product differentiation.
-Price competition can be intense among firms using the same standard.
- The selected standard may not be the efficient one. Because of lock-in effects and excess
inertia, it may become difficult to switch to a better one.

Management and Economics of Platforms

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