definition
Marketplace failure differs from market failure
Distinct from traditional market failure, marketplace failure concerns whether a particular marketplace works well; Uber became possible only with smartphones and GPS and has a simple matching problem (nearest driver), whereas Airbnb must elicit unknown preferences by showing pictures, so different marketplaces fail in different ways.
definitionpending
Speaker
Alvin RothEvidence Quote
“Uber has a very simple sort of problem, because they pretty much already know what you want... But Airbnb has a very different problem. They can't automatically tell what kind of apartment you want. They have to elicit your preferences.”
Created: 6/13/2026, 12:30:11 AM
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