Market size, not market share, key to platform profits in two-sided markets.
The article explores how market shares of platforms in two-sided markets relate to their profits. Contrary to popular belief, having a large market share doesn't always mean high profits. The study shows that profits are U-shaped in structure, meaning they peak at a certain ratio of market shares on both sides. However, larger overall market share is still linked to higher profits. This suggests that changes in the structure of market shares are crucial in understanding the complex relationship between market shares and profits.