"""Platform Competition in Two-Sided Markets,"" co-authored with Jean-Charles Rochet. Among other things, the paper offers a powerful explanation of why so many leading internet companies — most prominently Google and Facebook — don't charge for their products."

"The correct pricing calculation can be very difficult to make, and one of the points of the paper is simply to underscore the great diversity of strategies that firms in two-sided markets undertake."

"But the Internet offers an example of a particular case of a two-sided market, namely one in which the marginal cost of serving an additional customer on one side of the market is extremely low."

"In other words, while it costs a lot of money to run Facebook it costs very little money to serve one more Facebook customer. The same is true for Google."

"Consequently, the dominant strategy on the web has proven to be charging $0 to the customers on one side of the equation in order to maximize the size of your user base. Then you make your money on the second side of the market."

"These days you often hear people say things like ""if you're not paying for the product, you are the product."""

"Any time the market is two-sided you are both the customer and the product simultaneously. That's true whether the platform owner is charging you or not."

"What makes the ad-supported web services special is that it's economically feasible for them to offer a product that's free to one side of the market, in a way that isn't true for companies who are dealing with higher variable costs. What is true is that because of the interactions between the two sides of the market, these platform industries can lend themselves to total domination by a single firm."