Economics Of Digital Platforms

Multi-sided platform businesses like those run by Alibaba, Amazon, Apple, Facebook, Google and Tencent dominate the current economy. These businesses raise many new economic and strategic questions that policymakers and market participants are grappling with. Yet, students studying economics currently do not learn about the unique economic features and issues pertaining to these multi-sided businesses. This module will provide such an analysis, making use of the tools of basic game theory and industrial organization to do so. Topics include (i) the economic features of multi-sided platforms (e.g.., definitions of platforms, network externalities, pricing and competition between platforms); (ii) strategic issues faced by platforms (e.g., launching, platform design, leakage, revenue model); (iii) emerging policy issues (e.g., platform mergers, self-preferencing, abuse of dominance).