Understanding and modeling the network effects on a technological platform

Abstract

Cab aggregators like Ola, Uber, etc. employ technological platforms completely defy the conventional models. More often than not, the value chain looks at the right-side as the revenue side and the left-side as the cost. However, these new platforms witness additional dynamics given the two-sided revenue & cost models. These cab aggregators have two sides and three parties – the drivers, the customers and the firm (platform). As is always the case, the platforms connect the demand side (customers) and the supply side (drivers). In India, the industry witnesses’ subsidisation of both, the customer side and the driver side of the platform. The affordable charges and tariff fulfil the passenger needs of intra-city travel with great comfort and safety, especially in cities like Delhi, Mumbai, Bangalore and Hyderabad.