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Lecture 9

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McGill University
Economics (Arts)
ECON 208
Paul Dickinson

Lecture 3 Implementation of two-sided platform pricing strategies. (1) Exchanges • EBay is the classic example of a successful two-sided exchange network. They charge both listing fees and transactional fees to their sellers. • Chemdex provided an online marketplace for sales of chemicals, enzymes, lab equipment, biotech products like peptides, and many types of chemical reagents. Chemdex signed up nearly 150,000 users who ordered products from more than 2,000 suppliers. The Chemdex database listed around a million products from beakers to specialty biochemicals. (2) Software systems • Adobe’s revolutionary price model was to give away the reader for free and make people pay for Adobe Distiller. • Open table charged restaurants to join its reservation service. After a $1000 to $1300 system setup fee, restaurants paid $100 to $200 a month plus $1 for each honored reservation. This restricts the number of restaurants that it can sell for. Customers receive reward points. For each reservation a customer made, they earned $1. By 2009, Open table has served 75 million diners at 8,400 restaurants. (3) Content Markets • Platforms have to decide whether to charge people or use an advertising based model. This is not always obvious. • Facebook’s big challenge is to think of a way of mon
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