Design and Ownership of Two-Sided Networks: Implications for Internet Platforms
Abstract
Many Internet intermediaries operate two-sided networks, that is, they provide platforms to bring together two types of participants, or "sides," such as buyers and sellers. This paper develops a model that characterizes the intermediary's pricing in two-sided networks, the value created by these networks, and the allocation of that value across the two sides. It extends the two-sided networks literature by endogenizing the level of network effects as the result of relevant investments by the intermediary, which determine the design of the network. It shows that under certain assumptions about the available technologies, the design of the two-sided network is highly asymmetric independent of its ownership structure. The paper provides insight into design strategies for Internet platforms, and it discusses their welfare implications.
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Ownership decisions affect both the distribution of power and the relationships between actors in the ecosystem, leading to a vertical, horizontal, or modular system.
“Ownership decisions affect both the distribution of power and the relationships between actors in the ecosystem, leading to a vertical, horizontal, or modular system.”
From Digital platform ecosystems in flux: From proprietary digital platforms to wide-spanning ecosystems (2023) · cites this paper as Bakos & Katsamakas, 2008
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- Authors
- Bakos, Y., & Katsamakas, E.
- Affiliations
- New York University (US)
- Fordham University (US)
- Venue
- Journal of Management Information Systems
- Publisher
- Informa UK Limited
- Published
- 2008-09
- Volume
- 25
- Issue
- 2
- Pages
- 171-202
- ISSN
- 0742-1222 (ISSN-L)
- 1557-928X
- OpenAlex
- W1978978112
- Cited by
- 235
- References
- 41
- Citations by year
- 2026: 3 · 2025: 5 · 2024: 18 · 2023: 20 · 2022: 25 · 2021: 23 · 2020: 23 · 2019: 24 · 2018: 14 · 2017: 4 · 2016: 11 · 2015: 9 · 2014: 13 · 2013: 7 · 2012: 13
- FWCI
- 23.35
- Type
- journal article
- Language
- en
- Open access
- closed
- Locations
- Journal of Management Information Systems (publishedVersion)
- Topics
- Social Sciences › Business, Management and Accounting › Strategy and Management › Digital Platforms and Economics
- Social Sciences › Business, Management and Accounting › Strategy and Management › Business Strategy and Innovation
- Social Sciences › Decision Sciences › Management Science and Operations Research › Auction Theory and Applications
- Keywords
- digital platforms, platform design, platform ownership, network effects, platform pricing, value allocation, welfare analysis, intermediaries
About these checks
Registry, retraction, Cites and statistics results are computed, not judged, with one exception: a printed reference that no index lists is read once by a model before it counts as a citation error. Claims are extracted by a model and kept only when their quote appears verbatim in the text; each cited source is then checked, with a model’s help, for whether it says what the claim relies on. Those verdicts can be wrong — read the claim’s quote and the cited source before relying on one.
Statistics and arithmetic are recomputed, not judged.
Confidence bands are shown only for fields calibrated on our annotated test set. None is calibrated yet, so no band is shown.
What counts as a claim ›How we measure confidence ›How we check this ›
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