The Grand Bazaar on Clouds: Strategy for Marketplaces

In this class, we will analyze the economics and strategy of marketplaces for goods and services. We will consider the forces that have led to the proliferation of these marketplaces, as well as the strategic choices that determine which ones succeed. We will also study the strategy of managing these marketplaces: how should matching work, how can marketplace design solve problems of congestion or market thinness, how to get feedback and design a well-functioning rating system, and how a platform should trade off the welfare of the different sides of the market as it enters and grows. We will discuss marketplace design ideas that can improve trust and create a safe environment. We will also learn how to design non-monetary markets such as school choice, kidney exchange, and food banks. Finally, we will discuss the regulatory challenges of these marketplaces, especially with regard to labor income, price control, and monopoly power. Applications include ride-sharing and transportation; room-sharing and vacation rentals; Neobanks; creator/passion economy; B2B marketplaces; dating; and organized labor markets.