Part 1: Analyze a marketplace/platform business model (30 points)
Identify a company that has a marketplace/platform business model (you cannot choose E-Bay, Alibaba, Taobao, Tmall, Uber, Lyft, or Airbnb). First, briefly describe who this marketplace/platform is matching (i.e., who are the “buyers” and who are the “sellers”). Then, based on our discussion from Lecture 11, explain the mechanisms and processes this company is using to:
Create market thickness and increase the number of buyer-seller matches.
Create trust and reduce transaction risk;
Allow for price discovery and set prices;
Reduce transaction costs and manage congestion.
How is this company avoiding “leakage,” i.e., avoiding buyers and sellers circumventing the platform to transact directly with each other? If you don’t know how the company avoids leakage, speculate how you think they could do it. Alternatively, if you believe leakage is not an issue for the company, explain why.