Two-Sided Market

A two-sided market refers to a platform that connects two distinct groups who benefit from each other’s participation, such as buyers and sellers. Examples include online marketplaces like eBay or a payment processor like PayPal. The platform's value depends on attracting both sides, often offering incentives to balance their participation. When more buyers join, sellers are more likely to participate, and vice versa. This creates a network effect—more users on one side attract users on the other—enhancing the platform’s overall value for all participants.