Question

write down a model or an example of a two-sides market, stating explicitly the key assumptions. Using your model/example, explain if this structure experiences market failures. Justify

Answer 1

A two-sided market stands when both buyers and sellers meet to exchange a product or service, creating both bids to buy and offers to sell. This can happen when two user groups or agents connect through an intermediary or platform to the profit of both parties. Also known as a "two-way market" or a "two-sided network," examples of two-sided markets are seen in a many of industries and companies.
Assumptions:-1)A two-sided market has both buyers and sellers, meaning that market associates can both purchase and sell against these other market actors.
2)Market-makers are endowmented to provide prices on both sides of the market at the same time.
3)A two-sided market can create value by clarfying and advancing
transactions, as well as lower their cost for the parties it connects.
4)A two-sided market is often explain ed by the relationship the intermediary has with the external groups on its platform.
Two-Sided Market Examples

Two-sided markets exist in different industries, providing the interest of manufacturers, retailer, service providers, and consumers. A classic example is the yellow pages telephone directory, which provides consumers and advertisers. Credit card companies, which perform
as an intermediary between card-holding consumers and merchants.
Any two-sided marketplace experiences three uasal problems:

Creating demand

Creating supply (inventory)

Maximizing the number of matches between a buyer and seller (based on price, filters, and so on.)