Cattolica Admission Test

Practice session

Read the following passage: 'The rapid expansion of multi-sided digital platforms has transformed industrial organization. Unlike traditional linear supply chains that create value sequentially through supply-side economies of scale, digital platforms generate value primarily through indirect network effects. In a two-sided platform, the value derived by participants on one side—such as app developers or content creators—increases as the number of active users on the complementary side expands, creating positive feedback loops that can lead to "winner-take-most" market concentrations.' According to the passage, what is the primary mechanism through which two-sided digital platforms generate competitive value?

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