Two-Sided Market

  

Categories: Trading

You’ve got buyers and sellers. That situation constitutes a normal market. However, those components don't represent everything you need.

You also require some way to get the buyers and sellers together. Plus, things are complicated by the fact that the same people might become buyers and sellers at different times. They aren't distinct groups. A buyer now might become a seller later.

A two-sided market provides an efficient way to manage this situation. It involves an intermediary that facilitates interactions for a particular product or service. The facilitator matches the buyers and the sellers.

The stock market is a good example. It uses market makers to keep liquidity flowing between buyers and sellers. A two-sided market...with the market makers in the middle.

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