CFA Level I · CFA Level I Exam · Business Models
An online marketplace connects independent sellers with buyers, takes a commission on each transaction, and becomes more valuable to each buyer as more sellers join. A business model that most likely benefits from these features is best described as a:
The marketplace is best described as a platform model exhibiting network effects. It earns commissions by matching sellers and buyers, and each additional seller makes the platform more attractive to buyers, which in turn attracts more sellers.
- Aplatform model exhibiting network effectsCorrect
- Bvertically integrated manufacturing model
- Ccaptive-product model with consumables
Explanation
Intermediating between two user groups for a commission is a platform (marketplace) model, and rising value with more participants is a network effect. The other models do not rely on user-group interdependence.
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