Platform companies may charge low prices on one side not to drive rivals out of business but to expand the market on the other side.

Question

Quizplus · Accepted Answer

Platform companies often employ low pricing strategies to attract and increase the number of users on one side of the market, which can ultimately benefit the other side of the market as well as the platform itself. This is known as the "chicken-and-egg" problem, where the platform needs users to attract more users, but users need a critical mass of participants to engage with the platform. By charging low prices, the platform can encourage more users to join and participate, ultimately expanding the market for both sides of the platform.

Platform Companies May Charge Low Prices on One Side Not