Economic theories and dynamics of platforms

Through platform-based tourism, the industry is steadily evolving and revolutionising, catering to the needs of diverse, multifaceted customers worldwide. This chapter develops a comprehensive understanding of economic theories, including two-sided markets, network effects and economies of scale, in relation to platform-based tourism. The discussion is further illustrated through real-world examples, such as Airbnb and TripAdvisor. Additionally, the conceptual frameworks highlight how the platform-based industries utilise different economic theories to expand and create value in the market. Moreover, a detailed insight into how the platform-based tourism grows by connecting distinct users, leveraging data and algorithms for the smooth and cost-effective functioning of the system. Followed by recommendations for policymakers and practitioners, future research insights. Finally, a case study is presented to illustrate the competitive advantage, market dynamics, and practical challenges associated with the platform-based tourism approach. This study aims to address these challenges and promise a better future.