David Evans

Matchmakers: The New Economics of Multisided Platforms

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Many of the most dynamic public companies, from Alibaba to Facebook to Visa, and the most valuable start-ups, such as Airbnb and Uber, are matchmakers that connect one group of customers with another group of customers. Economists call matchmakers multisided platforms because they provide physical or virtual platforms for multiple groups to get together. Dating sites connect people with potential matches, for example, and ride-sharing apps do the same for drivers and riders. Although matchmakers have been around for millennia, they’re becoming more and more popular—and profitable—due to dramatic advances in technology, and a lot of companies that have managed to crack the code of this business model have become today’s power brokers.
Don’t let the flashy successes fool you, though. Starting a matchmaker is one of the toughest business challenges, and almost everyone who tries to build one, fails.
In Matchmakers, David Evans and Richard Schmalensee, two economists who were among the first to analyze multisided platforms and discover their principles, and who’ve consulted for some of the most successful platform businesses in the world, explain how matchmakers work best in practice, why they do what they do, and how entrepreneurs can improve their chances for success.
Whether you’re an entrepreneur, an investor, a consumer, or an executive, your future will involve more and more multisided platforms, and Matchmakers—rich with stories from platform winners and losers—is the one book you’ll need in order to navigate this appealing but confusing world.
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349 printed pages
Original publication



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    mail22801has quoted4 years ago
    Others, however, must decide whether to start out as a multisided platform or a single-sided firm, and some reverse their initial decision later on
    mail22801has quoted4 years ago
    The kind of control that platforms of this sort maintain over service providers shapes providers’ incentives, and these effects must be taken into account in designing the platform. For instance, if tomorrow Uber allowed drivers to set their own fares, competition among drivers would likely lower fares in the short run. This would make riders happier, as long as they could get rides. But lower fares would make driving less attractive, drivers would likely leave Uber, and a system with lower fares but fewer cars might well be less attractive to riders
    mail22801has quoted4 years ago
    Multisided platforms operate physical or virtual places where the participants get together. They have to make sure they design these places with a view toward enhancing the value of the direct and indirect network effects between participants

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