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Chapter 26: Q. 12 - Problems (page 598)

Consider the following list, and classify each item according to the appropriate type of two-sided market-audience-making, matchmaking, shared input, or transaction-based-and write a one sentence answer justifying your classification. (Hint: You may wish to check out the firms' Web sites to assist in answering this question.)

a. Realtor.com

b. NYTimes.com

c. Linux.com

d. Paypal.com

Short Answer

Expert verified

(a)Connect real estate buyers and sellers.

(b) Use messages to connect key figures to your audience.

(c) A general input market because it acts as a platform for connecting different people.

(d) When it comes to the transaction platform, it becomes atransaction-based market.

Step by step solution

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01

Given information 

The given sentences are :

An making market refers to a two-sided market in which the platform brings together

02

Explanation 

The audience creation market is atwo-way marketwhere the platform connects advertisers andviewers by providing some form of entertainment.The Matchmaking Market is atwo-sided marketwhere the platformhelps oneuser identify the otheruser whomatches their needs. Atypical input market is adouble-sided marketwhere producersneed to get the required inputs from the platform in order to access the other side of the market.The transaction-based market is atwo-way marketwhere the platform provides users with transaction clearing services.

03

Given information  

That are given sentences are : (a).

Realtor.com

04

Step 4:Explanation (a)

a)

Realtor.com is a matchmaking market that connects real estate buyers and sellers.

05

Given information 

That are given sentences are : (b)

NYTimes.com

06

Explanation (b)

b.

NYTimes.com is an audience-creating market because it connects the primary person to the audience through news.

07

Given information 

That are given sentences are: (c)

Linux.com

08

Explanation (c)

c.

Linux.com is a shared input market because it serves as a platform to connect different people by providing them with information on what they are looking for.

09

Given information 

That are given sentences are : (d)

Paypal.com

10

Explanation (d)

d.

Paypal.com is a transaction-based market because it serves as a transaction platform for both buyers and sellers.

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Most popular questions from this chapter

Suppose that the distribution of sales within an industry is as shown in the table.

a. What is the four-firm concentration ratio for this industry?

b. What is the eight-firm concentration ratio for this industry?

How might the fact that men continue to earn sight higher incomes than women help for explain the observation that matches are more may for cheat on their mates than females? (Hint. People with higher incomes have more funds available to pay for more "dates +with others besides their mates.)

Consider Figure 26-2. Suppose conditions in the industry change in such a way that the amount that each firm makes if it charges a high price when the other firm charges low price increases from \(2million to \)3million. Is the firm's pricing decision altered by this change and, if so, in what way? Explain briefly.

Consider two strategically dependent firms in an oligopolistic industry, Firm A and Firm B. Firm A knows that if it offers extended warranties on its products but Firm B does not, it will earn \(6 million in profits, and Firm B will earn \)2 million. Likewise, Firm B knows that if it offers extended warranties but Firm A does not, it will earn \(6 million in profits, and Firm A will earn\)2 million. The two firms know that if they both offer extended warranties on their products, each will earn \(3 million in profits. Finally, the two firms know that if neither offers extended warranties, each will earn \)5million in profits.

a. Set up a payoff matrix that fits the situation faced by these two firms.

b. What is the dominant strategy for each firm in this situation? Explain.

What is the value of the Herfindahl-Hirschman Index for the industry in Problem 26-2?

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