Online Platform (II)

Question 1

Value of Technology

Answer 1

Technology’s stand-alone value + Network Effect Value

Question 2

Network Effects - Metcalfe’s Law

Answer 2

The value of products or service increases as its number of users expands (value increases with n^2)

Question 3

What is a platform?

Answer 3

A platform business provides a digital marketplace, which brings together two or more independent groups

-Creates values by facilitating exchanges among buyers (or consumers), sellers (or producers), advertisers, and friends
-Platform businesses don’t own the means of production, instead they create the means of connection among their members

Question 4

Pipeline firm’s Asset v.s. Platform’s Asset

Answer 4

Pipeline: Internal resources
Platform: Network of producers and consumers

Question 5

Process of Pipeline -> Platform

Answer 5

Digital Transformation

Question 6

Characteristics of two-sided market (3)

Answer 6

1. They serve 2 distinct type of consumers
2. They facilitate these different types of consumers to interact with each other
3. At least one type of users care about the size of other type of users

Question 7

Same-side Network Effect

Answer 7

Value increases for users when more users on the same side join the platform

Question 8

Cross-side Network Effect

Answer 8

Value increases for one user group when the other user group grows.