Intermediaries as Two-Sided Markets in Electronic Commerce

Abstract

Online intermediaries play an important role in facilitating transactions in electronic commerce. In this paper we apply the insights from the emerging economic literature on two-sided markets and platform competition to the analysis of intermediaries in electronic commerce. In particular we are interested in answering the following questions: (1) How to categorize intermediaries in electronic commerce? (2) What are the optimal pricing schemes in the building of an electronic intermediary platform? (3)What are the appropriate governance structures of e-commerce intermediaries in different industries? Cases based on China's e-commerce practices will be cited for the validation of the theoretical arguments.