IDEAS home Printed from https://ideas.repec.org/a/spr/elmark/v29y2019i2d10.1007_s12525-018-0319-0.html
   My bibliography  Save this article

Beyond markets, hierarchies, and hybrids: an institutional perspective on IT-enabled two-sided markets

Author

Listed:
  • Kai Reimers

    (RWTH Aachen University)

  • Xunhua Guo

    (Tsinghua University)

  • Mingzhi Li

    (Tsinghua University)

Abstract

The term ‘two-sided market’, coined in the early 2000s, refers to a novel IT-enabled form of organizing economic activities exemplified by such firms as Uber, Amazon, and Taobao. While a rich literature has explored the phenomenon of two-sided markets, it has done so from a narrow technical perspective focusing on pricing issues. In this paper, we develop a novel framework to classify and characterize two-sided markets from an institutional perspective by extending and combining crucial categorical distinctions made by Williamson and Commons, one of the main sources of inspiration for Williamson’s Transaction Cost Economics. This new classification scheme identifies three institutionally distinct types of two-sided markets which are functional equivalents of traditional forms described by Williamson as markets, hybrids, and hierarchies. This suggests that two-sided markets may, under certain conditions, replace such traditional forms. We also develop a new proposition concerning the role of information technology in such a possible shift.

Suggested Citation

  • Kai Reimers & Xunhua Guo & Mingzhi Li, 2019. "Beyond markets, hierarchies, and hybrids: an institutional perspective on IT-enabled two-sided markets," Electronic Markets, Springer;IIM University of St. Gallen, vol. 29(2), pages 287-305, June.
    • Handle: RePEc:spr:elmark:v:29:y:2019:i:2:d:10.1007_s12525-018-0319-0
    DOI: 10.1007/s12525-018-0319-0
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1007/s12525-018-0319-0
    File Function: Abstract
    Download Restriction: Access to the full text of the articles in this series is restricted.
    File URL: https://libkey.io/10.1007/s12525-018-0319-0?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Joseph Farrell & Garth Saloner, 1985. "Standardization, Compatibility, and Innovation," RAND Journal of Economics, The RAND Corporation, vol. 16(1), pages 70-83, Spring.
    2. Jean-Charles Rochet & Jean Tirole, 2002. "Cooperation Among Competitors: Some Economics Of Payment Card Associations," RAND Journal of Economics, The RAND Corporation, vol. 33(4), pages 549-570, Winter.
    3. Jean‐Charles Rochet & Jean Tirole, 2006. "Two‐sided markets: a progress report," RAND Journal of Economics, RAND Corporation, vol. 37(3), pages 645-667, September.
    4. Steven Tadelis & Oliver E.Williamson, 2012. "Transaction Cost Economics [The Handbook of Organizational Economics]," Introductory Chapters,, Princeton University Press.
    5. Ciborra,Claudio U., 1996. "Teams, Markets and Systems," Cambridge Books, Cambridge University Press, number 9780521574655.
    6. Geoffrey G. Parker & Marshall W. Van Alstyne, 2005. "Two-Sided Network Effects: A Theory of Information Product Design," Management Science, INFORMS, vol. 51(10), pages 1494-1504, October.
    7. Helderman, Jan-Kees & Bevan, Gwyn & France, George, 2012. "The rise of the regulatory state in health care: a comparative analysis of the Netherlands, England and Italy," Health Economics, Policy and Law, Cambridge University Press, vol. 7(1), pages 103-124, January.
    8. Geoffrey Hodgson, 2002. "The Legal Nature of the Firm and the Myth of the Firm-Market Hybrid," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 9(1), pages 37-60.
    9. Erik Brynjolfsson & Thomas W. Malone & Vijay Gurbaxani & Ajit Kambil, 1994. "Does Information Technology Lead to Smaller Firms?," Management Science, INFORMS, vol. 40(12), pages 1628-1644, December.
    10. Pirrong, Craig, 1999. "The organization of financial exchange markets: Theory and evidence," Journal of Financial Markets, Elsevier, vol. 2(4), pages 329-357, November.
    11. Johanson, Jan & Mattsson, Lars-Gunnar, 1987. "Interorganizational relations in industrial systems : a network approach compared with the transaction cost approach," Working Papers 1987:7, Uppsala University, Department of Business Studies.
    12. Geoffrey G. Parker & Marshall W. Van Alstyne, 2000. "Information Complements, Substitutes, and Strategic Product Design," William Davidson Institute Working Papers Series 299, William Davidson Institute at the University of Michigan.
    13. Kaufman, Bruce E., 2003. "The organization of economic activity: insights from the institutional theory of John R. Commons," Journal of Economic Behavior & Organization, Elsevier, vol. 52(1), pages 71-96, September.
    14. Kenworthy, Lane, 2000. "Quantitative indicators of corporatism: A survey and assessment," MPIfG Discussion Paper 00/4, Max Planck Institute for the Study of Societies.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Natalia Szozda & Artur Świerczek, 2022. "Upstream and downstream dyad governance within the network structures: Creating supply chain governance for the customized products," Electronic Markets, Springer;IIM University of St. Gallen, vol. 32(2), pages 873-898, June.
    2. Rainer Alt & Hans-Dieter Zimmermann, 2019. "Electronic Markets on platform competition," Electronic Markets, Springer;IIM University of St. Gallen, vol. 29(2), pages 143-149, June.
    3. Laura Studen & Victor Tiberius, 2020. "Social Media, Quo Vadis? Prospective Development and Implications," Future Internet, MDPI, vol. 12(9), pages 1-22, August.
    4. Rainer Alt, 2022. "Electronic Markets on AI and standardization," Electronic Markets, Springer;IIM University of St. Gallen, vol. 32(4), pages 1795-1805, December.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Howell, Bronwyn, 2006. "Unveiling 'Invisible Hands': Two-Sided Platforms in Health Care Markets," Working Paper Series 18936, Victoria University of Wellington, The New Zealand Institute for the Study of Competition and Regulation.
    2. Howell, Bronwyn, 2006. "Unveiling 'Invisible Hands': Two-Sided Platforms in Health Care Markets," Working Paper Series 3841, Victoria University of Wellington, The New Zealand Institute for the Study of Competition and Regulation.
    3. Doh-Shin Jeon & Nikrooz Nasr, 2016. "News Aggregators and Competition among Newspapers on the Internet," American Economic Journal: Microeconomics, American Economic Association, vol. 8(4), pages 91-114, November.
    4. Xing Wan & Javier Cenamor & Geoffrey Parker & Marshall Van Alstyne, 2017. "Unraveling Platform Strategies: A Review from an Organizational Ambidexterity Perspective," Sustainability, MDPI, vol. 9(5), pages 1-18, May.
    5. repec:vuw:vuwscr:18936 is not listed on IDEAS
    6. Oliver Budzinski & Annika Stöhr, 2019. "Competition policy reform in Europe and Germany – institutional change in the light of digitization," European Competition Journal, Taylor & Francis Journals, vol. 15(1), pages 15-54, January.
    7. Filistrucchi, L. & Gerardin, D. & van Damme, E.E.C. & Keunen, S. & Klein, T.J. & Michielsen, T.O. & Wileur, J., 2010. "Mergers in Two-Sided Markets - A Report to the NMa," Other publications TiSEM f901d1fe-8878-444e-a685-8, Tilburg University, School of Economics and Management.
    8. Lapo Filistrucchi & Damien Geradin & Eric van Damme, 2012. "Identifying Two-Sided Markets," Working Papers - Economics wp2012_01.rdf, Universita' degli Studi di Firenze, Dipartimento di Scienze per l'Economia e l'Impresa.
    9. Jullien, Bruno & Pavan, Alessandro & Rysman, Marc, 2021. "Two-sided Markets, Pricing, and Network Effects," TSE Working Papers 21-1238, Toulouse School of Economics (TSE).
    10. Justus Haucap & Torben Stühmeier, 2016. "Competition and antitrust in Internet markets," Chapters, in: Johannes M. Bauer & Michael Latzer (ed.), Handbook on the Economics of the Internet, chapter 9, pages 183-210, Edward Elgar Publishing.
    11. Jeon, Doh-Shin & Jullien, Bruno & Klimenko, Mikhail, 2021. "Language, internet and platform competition," Journal of International Economics, Elsevier, vol. 131(C).
    12. Fiedler, Ingo C, 2010. "Antitrust in two-sided markets: Is competition always desirable?," Berkeley Olin Program in Law & Economics, Working Paper Series qt5dp3q033, Berkeley Olin Program in Law & Economics.
    13. Liu, He & Li, Xuerong & Wang, Shouyang, 2021. "A bibliometric analysis of 30 years of platform research: Developing the research agenda for platforms, the associated technologies and social impacts," Technological Forecasting and Social Change, Elsevier, vol. 169(C).
    14. Stefan Behringer & Lapo Filistrucchi, 2015. "Areeda–Turner in Two-Sided Markets," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 46(3), pages 287-306, May.
    15. Daniel Birke, 2009. "The Economics Of Networks: A Survey Of The Empirical Literature," Journal of Economic Surveys, Wiley Blackwell, vol. 23(4), pages 762-793, September.
    16. Edward G. Anderson & Geoffrey G. Parker & Burcu Tan, 2014. "Platform Performance Investment in the Presence of Network Externalities," Information Systems Research, INFORMS, vol. 25(1), pages 152-172, March.
    17. Marc Rysman, 2009. "The Economics of Two-Sided Markets," Journal of Economic Perspectives, American Economic Association, vol. 23(3), pages 125-143, Summer.
    18. Gérard P. Cachon, 2020. "A Research Framework for Business Models: What Is Common Among Fast Fashion, E-Tailing, and Ride Sharing?," Management Science, INFORMS, vol. 66(3), pages 1172-1192, March.
    19. Howell, Bronwyn, 2007. "A Pendulous Progression: New Zealand's Telecommunications Regulation 1987-2007," Working Paper Series 19074, Victoria University of Wellington, The New Zealand Institute for the Study of Competition and Regulation.
    20. Vladimir Mazalov & Elena Konovalchikova, 2020. "Hotelling’s Duopoly in a Two-Sided Platform Market on the Plane," Mathematics, MDPI, vol. 8(6), pages 1-16, May.
    21. Julien Gosse & Charles Hoffreumon & Nicolas van Zeebroeck & Jacques Bughin, 2020. "The Value of Platform Strategy. It's the Ecosystem. Stupid!," iCite Working Papers 2020-033, ULB -- Universite Libre de Bruxelles.

    More about this item

    Keywords

    Two-sided markets; Institutional economics; Platform competition; IT-enabled organizational change; Coordination mechanisms;
    All these keywords.

    JEL classification:

    • B52 - Schools of Economic Thought and Methodology - - Current Heterodox Approaches - - - Historical; Institutional; Evolutionary; Modern Monetary Theory;
    • L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:spr:elmark:v:29:y:2019:i:2:d:10.1007_s12525-018-0319-0. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.