What are platform markets?

In economics, platform markets refer to markets where a platform, often in the form of a digital or technological infrastructure, facilitates interactions between two or more distinct groups, typically buyers and sellers. These platforms act as intermediaries, connecting users and enabling transactions, communication, or the exchange of goods and services.

Here are some real-world examples to illustrate the concept of platform markets:

1. Digital Marketplaces:
   • Example: Amazon Marketplace
     • Amazon provides a platform for independent sellers to list and sell their products. The platform connects buyers with sellers, handling transactions, logistics, and customer reviews.
2. App Stores:
   • Example: Apple App Store, Google Play Store
     • App stores serve as platforms where app developers can showcase and distribute their applications to a large user base. The platform facilitates transactions and ensures a standardized experience for users.
3. Social Media Platforms:
   • Example: Facebook, Instagram, Twitter
     • Social media platforms connect users, content creators, and advertisers. Users interact with each other, while businesses leverage the platform for marketing and communication.
4. Ride-Sharing Platforms:
   • Example: Uber, Lyft
     • Ride-sharing platforms connect drivers with passengers, creating a convenient and efficient way for people to find transportation services.
5. Payment Platforms:
   • Example: PayPal, Venmo
     • Payment platforms enable financial transactions between individuals and businesses. Users can send and receive money electronically through these platforms.
6. Online Marketplaces:
   • Example: eBay
     • eBay serves as a platform where individuals and businesses can buy and sell a wide range of products through online auctions or fixed-price listings.
7. Crowdfunding Platforms:
   • Example: Kickstarter, Indiegogo
     • Crowdfunding platforms connect project creators with backers, allowing individuals to raise funds for creative projects, inventions, or business ideas.
8. Cloud Computing Platforms:
   • Example: Amazon Web Services (AWS), Microsoft Azure
     • Cloud computing platforms provide infrastructure, services, and resources to businesses, allowing them to host applications, store data, and scale their operations.
9. Streaming Services:
   • Example: Netflix, Spotify
     • Streaming platforms connect content producers with consumers, offering on-demand access to movies, TV shows, music, and other digital content.
10. Job Marketplaces:
    • Example: LinkedIn
      • LinkedIn serves as a platform connecting job seekers with employers, allowing professionals to network, showcase their skills, and explore job opportunities.

In platform markets, the success of the platform often depends on network effects, where the value of the platform increases as more users join, creating a positive feedback loop. This concept is central to understanding how platforms can quickly become dominant players in their respective markets.