Classroom Companion: Business

 
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Question 10.1 Three-Sided Markets
Postmates is a logistics company mediating between companies having goods 
to deliver, engaging couriers for delivering the goods, and customers. Illustrate 
Postmates as an MSP and its associated user groups. Identify same-side and cross-
side network effects within and between user groups. Which of the user groups con-
tribute to Postmates’ revenues?
 
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Question 10.2 Multisided Platform Laws
Discuss whether Metcalfe’s law and Odlyzko-Tilly’s law can be applied to multisided 
platforms.
 
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Question 10.3 YouTube
What is the ecosystem of YouTube? Who generates the revenues? Identify cross-side 
and same-side network effects.
 
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Answer 10.1
The configuration of Postmates is shown in the figure. The platform serves three user 
groups: companies (restaurants and merchants) selling the goods, the couriers trans-
porting the good to the customers, and the customers ordering the good. Referring 
to 
.
Fig. 
10.5
, these correspond to merchants, professionals, and customers. The 
companies selling the goods contribute with revenue to Postmates. Postmates pays 
10.6 · Conclusions

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the couriers for transporting the goods. The customers pay the company delivering 
the good, where the price also covers the cost of engaging couriers.
There are cross-side network effects between all three groups. The more sellers, 
the more customers, and the more couriers. The more customers, the more seller, and 
the more couriers. There are no significant same-side network effects (
.
Fig. 
10.8
).
 
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Answer 10.2
Yes. In an MSP, there are cross-side network effects. Metcalfe’s law or Odlyzko- 
Tilly’s can be applied to calculate the strength of the network effects or the value that 
each user group represents. In 
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Box 
10.1
 and 
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Case Study 
10.1
, Metcalf ’s law was 
used to do this.